Stock Analysis & Valuation T-Mobile US, Inc. (0R2L.L)

• Previous Close: £196.92
• Sector Valuation Confidence Level: High

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	120.00	-39
Intrinsic value (DCF)	105.00	-47
Graham-Dodd Method	36.40	-82
Graham Formula	85.50	-57

Strategic Investment Analysis

Company Overview

T-Mobile US, Inc. is a leading telecommunications provider in the United States, offering mobile communications services to over 108.7 million customers across postpaid, prepaid, and wholesale markets. Headquartered in Bellevue, Washington, the company operates under the T-Mobile and Metro by T-Mobile brands, delivering voice, messaging, and data services through a robust network of approximately 102,000 macro cell and 41,000 small cell/distributed antenna system sites. T-Mobile's product portfolio includes smartphones, wearables, tablets, and accessories, distributed via owned retail stores, e-commerce platforms, and third-party dealers. As part of the Communication Services sector, T-Mobile has solidified its position as a key player in the competitive U.S. telecom industry, leveraging its nationwide 5G network expansion and customer-centric innovations. The company's strategic acquisitions, including Sprint, have further strengthened its market presence, making it a formidable competitor against industry giants like Verizon and AT&T.

Investment Summary

T-Mobile US presents a compelling investment case with its strong revenue growth ($81.4 billion in FY 2023), robust operating cash flow ($22.3 billion), and expanding 5G network infrastructure. The company's net income of $11.3 billion and diluted EPS of $9.66 reflect solid profitability, while its beta of 0.681 suggests lower volatility compared to the broader market. However, investors should note T-Mobile's high total debt ($113.9 billion) and significant capital expenditures ($8.8 billion), which could pressure free cash flow. The dividend yield, at $3.06 per share, may appeal to income-focused investors, but the company's primary growth driver remains its aggressive 5G rollout and market share gains in the postpaid segment. Competitive pressures from Verizon and AT&T, along with regulatory risks in the telecom sector, are key considerations.

Competitive Analysis

T-Mobile US has carved out a strong competitive position in the U.S. telecom market through its 'Un-carrier' strategy, which emphasizes customer-friendly policies like no-contract plans and transparent pricing. The company's acquisition of Sprint in 2020 significantly expanded its spectrum holdings, enabling a faster and more extensive 5G rollout than many competitors. T-Mobile's mid-band 5G network now covers over 300 million people, giving it a technological edge in speed and coverage. However, Verizon and AT&T still dominate in enterprise and premium postpaid segments, where brand loyalty and bundled services (e.g., HBO Max with AT&T) remain strong. T-Mobile's competitive advantage lies in its value proposition—offering lower-priced plans without sacrificing network quality—which has driven consistent subscriber growth. Its prepaid brand, Metro by T-Mobile, also competes effectively against Tracfone and Cricket Wireless. The company's weaknesses include a smaller fiber and enterprise footprint compared to AT&T and reliance on third-party distributors for device sales. Regulatory scrutiny over telecom consolidation could also impact future M&A opportunities.

Major Competitors

• Verizon Communications Inc. (VZ): Verizon is the largest U.S. wireless carrier by revenue, with a stronghold in premium postpaid and enterprise markets. Its network reliability and extensive fiber infrastructure are key strengths, but its higher pricing and slower 5G rollout in mid-band spectrum (C-band) have allowed T-Mobile to gain share. Verizon's dividend yield (~6.5%) is attractive, but its heavy debt load ($151 billion) limits flexibility.
• AT&T Inc. (T): AT&T competes with T-Mobile in wireless while also owning a vast fiber and media portfolio (Warner Bros. Discovery stake). Its FirstNet public-safety network is a differentiator, but its wireless growth has lagged due to past missteps (e.g., DirecTV acquisition). AT&T's recent focus on deleveraging ($128 billion debt) has come at the cost of network investment, though its HBO Max bundling offers churn reduction.
• Charter Communications Inc. (CHTR): Charter competes indirectly via its Spectrum Mobile MVNO (using Verizon's network), leveraging its cable broadband base to bundle wireless services. Its strength lies in rural/suburban markets where T-Mobile's 5G is less dense, but it lacks owned wireless infrastructure. Charter's high-speed internet dominance helps offset wireless limitations.
• Lumen Technologies Inc. (LUMN): Lumen (formerly CenturyLink) is a weaker competitor in wireless but overlaps in enterprise fiber and wholesale services. Its declining legacy voice business and limited 5G capabilities make it non-threatening to T-Mobile's core mobile offerings. Financial instability and asset divestitures have further reduced its competitiveness.
• The Walt Disney Company (DIS): Disney is an unconventional competitor via its ESPN Mobile virtual network (MVNO partnership with Verizon). While not a direct threat, Disney's content bundling potential could disrupt telecom-cable bundling models. T-Mobile's Netflix/Apple TV+ perks aim to counter this.