Today, T-Mobile (NYSE:TMUS) announced that it completed its $26.5 billion acquisition of Sprint to create New T-Mobile. Both companies managed to close the deal after waiting for nearly two years.
T-Mobile and Sprint merger deal
The merger deal between T-Mobile and Sprint consolidates the third and fourth-largest US wireless service providers. The combined company will be in a better position to compete with larger rivals like AT&T (NYSE:T). The New T-Mobile will also be able to invest efficiently in wireless networks and cover more people. Dish Network (NASDAQ:DISH) will acquire some of the divested wireless assets from the merger deal. Dish will likely create its own wireless network.
According to a CNET report, “T-Mobile and Sprint’s combined assets should supercharge their ambitions to roll out 5G across the country, and the merged company’s larger presence should enable it to better compete against larger rivals Verizon Wireless and AT&T. Dish, meanwhile, represents a new low-cost alternative once it gets its service rolled out.”
The report also said, “Wednesday’s announcement isn’t the full completion of the deal, which still needs both an approval from the California Public Utilities Commission and clearance under the federal antitrust Tunney Act. But those hurdles should be formalities.”
The Department of Justice and the FCC supported the transaction last year. The merger deal also won a legal challenge that was filed by more than a dozen state attorneys general on antitrust concerns.
In addition, Mike Sievert was appointed as the CEO of New T-Mobile, effective immediately. Sievert will replace John Legere. Legere will still be a member of T-Mobile’s board of directors for the rest of his current term until June 2020.
Wall Street analysts expect T-Mobile to post sales of $11.4 billion in the first quarter. The figure would mark a rise of 3.2% YoY (year-over-year) compared to $11.1 billion in the first quarter of 2019. Also, analysts expect the company to post an adjusted EPS of $1.01 in the first quarter compared to $1.06 in the first quarter of 2019. Currently, analysts expect a 5.8% and 6.5% rise in the company’s 2020 and 2021 sales, respectively. Meanwhile, they expect an adjusted EPS of $4.48 and $5.38 in 2020 and 2021, respectively.
AT&T will likely post sales of $44.5 billion in the first quarter—a fall of 0.6% YoY from sales of $44.8 billion in the first quarter of 2019. Also, analysts expect an adjusted EPS of $0.87 in the first quarter compared to $0.86 in the first quarter of 2019.
T-Mobile and Sprint’s stock performance
On Tuesday, T-Mobile stock rose 0.9% and closed at $83.90 with a market cap of $71.9 billion. Notably, the stock was trading 17.2% below its 52-week high of $101.35 and 32.1% above its 52-week low of $63.50. So far, T-Mobile stock has risen 7.0% YTD (year-to-date) as of Tuesday. In comparison, AT&T has returned -25.4% YTD.
On Tuesday, T-Mobile stock was trading 3.4% above its 20-day moving average of $81.14. Meanwhile, the stock is trading 2.2% below its 50-day moving average of $85.80 and 2.4% above its 100-day moving average of $81.95. T-Mobile’s 14-day RSI (relative strength index) score is 51. The RSI suggests that the stock isn’t “oversold” or “overbought.”
On Tuesday, T-Mobile stock closed near its middle Bollinger Band level of $81.75. The value indicates that the stock isn’t “oversold” or “overbought.” T-Mobile’s 14-day MACD is 3.09, which also indicates that the stock is on an upward trading trend.
Among the 23 analysts that follow T-Mobile, 19 recommend a “buy” and four recommend a “hold.” None of the analysts recommend a “sell.” As of Tuesday, analysts’ consensus target price is $100.10, which implies a 12-month return potential of 19.3%.
As of 10:20 AM ET today, T-Mobile stock rose by 2.2% at $85.80. Meanwhile, AT&T stock fell by 3.1% at $28.29. The S&P 500 and the Dow Jones Industrial Average fell by 2.9% and 2.7%, respectively. The broader indexed have been falling amid the coronavirus outbreak.
To learn more about the merger deal, read Are T-Mobile and Sprint near the Last Merger Hurdle? and T-Mobile and Sprint Merger Closure Might Get Delayed. Also, read Will T-Mobile and Sprint Merger Close amid Virus Disruptions? to learn more.