What’s T-Mobile’s Value Proposition in the US Telecom Market?



T-Mobile’s scale

Earlier in this series, we looked at some updates for T-Mobile (TMUS) from the recent MoffettNathanson Media & Communications Summit. Now, let’s look at some value-centric measures of the company compared to its peers in the United States.

We’ll start with the scales of the four biggest US wireless players. As we mentioned earlier in the series, these players are Verizon (VZ), AT&T (T), T-Mobile, and Sprint (S).

As of May 23, 2016, AT&T was the largest global telecommunications player by market capitalization. Verizon was the second-largest major player. Note that both Verizon and AT&T both have significant wireline operations.

As of May 23, among the top four US wireless carriers, T-Mobile was the third-largest by market capitalization. As you can see in the above chart, Sprint had the lowest market capitalization as of the same date.

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T-Mobile’s enterprise value multiples

Now, let’s move on to the enterprise value (or EV) multiples of the top four US wireless players. T-Mobile’s current year EV-to-EBITDA (earnings before interest, tax, depreciation, and amortization) was ~5.9x as of May 23, 2016. This multiple was higher than Sprint’s ~4.6x as of the same date.

Integrated US telecom players Verizon and AT&T had similar EV-to-EBITDA metrics of ~6.7x and ~6.6x, respectively, on May 23.

Instead of taking direct exposure to T-Mobile’s stock, you may want to take diversified exposure to the company by investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ held ~0.6% in TMUS at the end of April 2016.


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