“T-Mobile, Merger with Sprint Virtually Confirmed... Increasing Investment Appeal”

[Asia Economy Reporter Eunmo Koo] T-Mobile has effectively secured its merger with Sprint, which is analyzed to have increased its investment attractiveness.

On the 22nd, Hana Financial Investment rated T-Mobile's investment attractiveness as 'high.' Researcher Hongshik Kim of Hana Financial Investment explained in a report on the same day, "The U.S. federal court approved the merger between Sprint and T-Mobile, and with New York and Texas withdrawing their appeals against the merger, the merger is virtually confirmed. Considering the subscriber value, the market capitalization is evaluated to be too low compared to competitors."

He added, "Post-merger, improvements in network quality and strengthened marketing are expected to enhance subscriber market share and subscriber quality. In the long term, the reduction in the number of operators is likely to ease price competition among operators in the U.S. market, which is another reason."

The earnings trend is also favorable, leading to an optimistic long-term earnings outlook. In the fourth quarter of last year, T-Mobile recorded revenue of $11.9 billion, a 4% increase compared to the same period last year, and operating profit of $1.2 billion, a 9% increase, showing good performance considering the typical seasonality of telecommunications companies.

Researcher Kim explained, "This was due to an 8% increase in revenue from postpaid subscribers compared to the same period last year and a 12% growth in corporate revenue. Although operating expenses increased overall due to higher depreciation from increased capital expenditures ($5.5 billion in 2018 → $6.4 billion in 2019) and increased selling and administrative expenses including marketing costs, the increase in service revenue maintained a favorable earnings trend."