T-Mobile US transmits a clear signal to investors

A T-Mobile store is pictured in the Manhattan borough of New York, New York, US, May 20, 2019. REUTERS/Carlo Allegri

NEW YORK, Sept 9 (Reuters Breakingviews) – T-Mobile US (TMUS.O) is sending a clear signal about the benefits of being bigger. The $182 billion company announced a $14 billion share buyback program on Thursday, reflecting the fact that both profit and subscriber numbers are rising. Fears that mobile prices would rise when T-Mobile acquired SoftBank’s Sprint have not materialized, allaying at least one of the potential objections to the merger.

T-Mobile’s strategy of keeping prices down has been a boon to inflation-wary consumers. Last quarter, it raised its forecast for additional subscribers for this year to as high as 6.3 million from a previous high of 5.8 million.

Shareholders have done better too. Since it closed its merger in April 2020, T-Mobile has produced an annualized return of 25% versus AT&T (TN) and Verizon Communications (VZ.N), which have negative returns during the same period. T-Mobile is projected to more than double its pre-tax profit in 2023 compared to this year, according to Refinitiv while its competitors are expected to increase in the very low single digits. What’s good for customers can benefit investors too. (By Jennifer Saba)

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