T-Mobile (TMUS): Takeaways From Management Meetings - Jefferies
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Jefferies analyst, Mike MacCormack, reiterated his Buy rating on shares of T-Mobile US, (NASDAQ: TMUS) after hosting management meetings with T-Mobile Head of Investor Relations, Nils Paellmann. Network capacity continues to expand and the company is taking share from both AT&T and Verizon through a renewed focus on family plans which could offer upside to sub additions.
Deployment of 700Mhz is ongoing, with noticeable churn reduction in recently deployed markets. On the capacity side, efforts to refarm PCS/1900 spectrum for additional LTE builds should span the next 2-3 years, while AWS-3 deployments should begin later this year. Lastly, as the Broadcaster Auction progresses, we expect to see TMUS spend up to $8.3bn ($1.7bn used to acquire 700Mhz spectrum), maintaining the targeted 3-4x leverage target.
The analyst stated "T-Mobile’s recent share gains come with a renewed focus on Family Plans, an area previously dominated by VZ and T. The contracts provide a substantially higher lifetime value, coming with better data attach rates, despite creating some ARPU dilution. We expect gross adds to continue with impressive momentum, particularly as AT&T allows low end subscribers to churn. Although the family share plans are dilutive to ARPU, we believe T-Mobile can offset the pressures as subscribers opt for larger data buckets and unlimited plans."
.price target of $55.00
Shares of T-Mobile US, closed at $47.78 yesterday.
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