T-Mobile Looking at Rival UScellular, CFO Says
Telephone and Data Systems and UScellular stock prices rose Friday after T-Mobile Chief Financial Officer Peter Osvaldik said his company was eyeing UScellular. The boards of TDS and UScellular are exploring the future of the carrier and “strategic alternatives," the companies said in August (see 2308070043). TDS was up 5.85% to $20.08 Friday, UScellular 3.26% to $46.51.
Osvaldik was asked during a Thursday call on Q4 results about potential mergers and other investments. The carrier is looking at investments in its network, “growth of the core business, the adjacent businesses,” he said: "We'll look at all other things beyond that, whether that's in the fiber space, whether that's … UScellular, as we look at that process and see, are there value-creating opportunities.”
T-Mobile’s last big buy was Sprint, a deal the FCC approved in October 2019 (see 1910160058). That gave T-Mobile the 2.5 GHz spectrum it has used to pass its rivals AT&T and Verizon. Currently, T-Mobile is wrapping up its acquisition of Mint Mobile (see 2303150032). Osvaldik expects that deal to close in the current quarter.
T-Mobile reported positive results (see 2401250076) Friday. It forecast postpaid net customer additions as high as 5.5 million in 2024 and adjusted EBITDA less lease revenues, as high as $31.9 billion.
MoffettNathanson’s Craig Moffett said questions remain about where all the subscriber adds are originating. Verizon reported 318,000 postpaid phone adds in the quarter, AT&T 526,000. “As strong as postpaid results have been, prepaid results have been weak” for the major carriers, Moffett told investors: While projected adds for the year are high, “T-Mobile deserves the benefit of the doubt; they’ve consistently delivered on every promise, and they’ve considerably beaten and raised the guidance they’ve given each January.”
“The short version is this,” T-Mobile CEO Mike Sievert said on the call: “We see continued strong customer and revenue growth, translating into rapid growth in cash flows in 2024 and beyond.”
T-Mobile benefits from a highly competitive wireless market, said Mike Katz, president-marketing, innovation and experience. “When there's lots of competition and customers are looking around shopping, T-Mobile ends up being the net winner.”
In addition, T-Mobile also said it added 541,000 home internet customers in Q4, bringing its total to 4.8 million. The company recently raised the product's price $10 per month, from $50 to $60 for new customers. As T-Mobile is “one of the largest ISPs in America,” it is moving away from “promotional pricing,” Katz said. Its target is 7 million-8 million fixed wireless customers by the end of 2025.
Executives said on the call T-Mobile has relatively little exposure if Congress doesn't review the affordable connectivity program (see 2401250075). “When it comes to the number of subscribers in our reported base, it's substantially none,” Sievert said. “There's a very, very small amount of Metro customers, and that's it.” Assurance Wireless, T-Mobile’s Lifeline business, has ACP customers, but they’re not reported as part of the consumer subscriber base, he said.