All of the Tier-1 carriers have reported third-quarter earnings and at least one analyst like what he saw in T-Mobile.
Even as shares of the Un-Carrier were trading down 7 percent since its third-quarter report, Oppenheimer’s Tim Horan said investors should put their money behind T-Mobile’s growth story.
Horan said called T-Mobile’s results a “solid overall quarter,” taking exception with higher spending and a “messy transition to lease accounting.” That said, Horan likes how T-Mobile is positioned going forward.
“TMUS raised net add guidance and maintained EBITDA and CAPX guidance, although we expect TMUS to handily beat on EBITDA because of lease accounting,” Horan wrote. “We continue to believe TMUS will maintain strong subscriber growth, and mgm’t was very optimistic about 4Q15 trends, with lower churn and postpaid ARPU stabilization the biggest positives.”
Horan expects “strong EBITDA and FCF growth the next two years” and also said that “6x estimated 2016 cash EBITDA” looks attractive.
As for future profitablity, Horan said T-Mobile is on the right track
“With a greatly improving network, the company should be able to start increasing prices, which we have not yet modeled in,” Horan said. “We continue to believe TMUS’s stand-alone story is attractive with M&A upside LT.”
T-Mobile’s earnings shined, especially as AT&T’s net postpaid additions were dwarfed by those reported from T-Mobile and Verizon. For its part, T-Mobile reported 1.1 million branded postpaid net adds, most of them phones skimemd from the likes of AT&T, Sprint, and Verizon, likely in that order. Verizon, meanwhile, added 1.3 million net retail postpaid connections during the quarter, managing a lean churn of .99 percent.