T-Mobile (TMUS): Notes From The Road - Jefferies
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Jefferies analyst, Mike McCormack, reiterated his Buy rating on shares of T-Mobile US (NASDAQ: TMUS) after taking investor relations ( Nils Paellmann and Ben Barrett) on the road to meet with clients.
Porting ratios have been strong and noted a pickup even prior to the iPhone 7 launch due to a positive reaction to T-Mobile ONE. The free iPhone 7 promotion was always intended to be short term, with management acknowledging that it may have lost some efficacy as others replicated the offer. Newer promotions enable consumers to obtain an iPhone 7 for $100/$200, with the trade-in of an iPhone 6S/6. It's unclear what promotions may accompany the holiday season, though management noted that, in the past, T-Mobile has been less promotional during this period relative to peers.
EBITDA guidance was recently reaffirmed, even amid higher implied subsidies due to the iPhone promotion. The balance between subscriber growth and profitability in 4Q will likely be watched closely, given reaffirmed guidance.
ARPU is expected to remain relatively flat. Management noted that the business model works well with stable pricing given on-going share gains. The newly introduced T-Mobile ONE (unlimited) offer should be accretive to ARPU over time, though consumers optimizing plans could mitigate the benefits in the near-term.
No change to the price target of $55.00.
Shares of T-Mobile US, closed at $46.72 yesterday.
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