It has been a little while since telecommunications giant T-Mobile (NASDAQ:TMUS) acquired Sprint. Interestingly, this event wasn’t really treated as big news when it happened in April. Perhaps it was just a delayed reaction as it took a couple more months before T-Mobile stock climbed substantially higher.
Or, perhaps there were other events that stole traders’ attention at that time. America was still reeling from the impact of the novel coronavirus. Moreover, there has been a rash of mergers, acquisitions, initial public offerings and special purpose acquisition companies in 2020.
With all of that going on, the Sprint merger was a buried headline. Yet, it was a pivotal event in the ongoing wireless wars. Months later, we can write T-Mobile’s report card and assess the company’s progress since the Sprint acquisition.
Suffice it to say that T-Mobile is now a bigger and better contender. The share price has reflected this somewhat, but there could be much more room for growth here. It’s bound to be one of the winners as things heat up in wireless communication.
T-Mobile Stock at a Glance
Interestingly, T-Mobile stock popped immediately prior to the onset on the coronavirus in the United States. After Covid-19 hit, the share price came right back down to the $75 area.
However, the bulls held this level firmly and a steady rebound followed in the T-Mobile stock price. It wasn’t a proverbial “moon shot,” but instead took a consistent path to $100 and beyond. By Sept. 25, the share price was close to $112.
And so, it appears that the shareholders have voted in favor of T-Mobile’s acquisition of Sprint. It wasn’t quick or powerful, but the move in the share price should be sustainable as T-Mobile stock isn’t in a bubble by any means.
Connectivity and Value
The world is migrating towards 5G network connectivity and T-Mobile certainly hasn’t been asleep at the wheel. Going back to the Sprint merger, we already saw the signs of T-Mobile as a legitimate contender in the 5G space. That’s why pinpointing the 5G winners like TMUS is a guaranteed pathway to enduring profits.
By the end of 2019, T-Mobile and Sprint combined had over 140 million connections. Furthermore, the two companies had $77.5 billion in revenues last year.
The numbers prove that T-Mobile is a power player, but what is the company’s edge? Perhaps it could be summed up as a combination of connectivity and value.
Around the time when the merger took place, J.P. Morgan analyst Philip Cusick opined that “T-Mobile will continue to offer a solid product for a lower price” than the company’s peers. Cusick added that the acquisition will enable T-Mobile to offer “more relative value to customers over time.”
Staying Ahead in the 5G Race
Bolstering Cusick’s contention is T-Mobile’s promise to refrain from raising prices on its plans for three years. In addition, T-Mobile pledged not to charge extra for 5G connectivity.
That’s a forceful move into the 5G space, and we have yet to see T-Mobile’s major competitors commit to ultra-affordable 5G access on this level.
Now in September, it’s evident that T-Mobile remains fully engaged with its foray into 5G. CEO Mike Sievert continues to focus on cutting costs, but not at the expense of quality.
In this vein, T-Mobile just signed a contract with a cell phone tower real estate investment trust (REIT) in which T-Mobile will be leasing space for antennas. It’s a savvy move as the company strives to get a leg up on its peers in the ongoing battle for greater coverage and more reliable connectivity.
The Takeaway
Sievert recently boasted that in the 5G era, T-Mobile is “way out in front.” This might actually be more than just braggadocio.
When the market fully appreciates T-Mobile’s serious commitment to the 5G network, T-Mobile stock should climb much higher. This hasn’t happened quite yet as traders are busy focusing on other shiny objects in the stock market.
In time, the value of the Sprint acquisition will be priced into T-Mobile stock. Until that occurs, you can still own the shares at a very reasonable price point.
Although T-Mobile will be among the key players in the 5G movement, there are other all stars in mobile communication that investors aren’t paying much attention to.
While several tech titans helped lay the foundation for our hyper-connected society, the company that InvestorPlace’s chief technology analyst Matt McCall identifies with his latest special report will lead a technological revolution that will forever change communication on a global scale.
He’s worked feverishly with our veteran research team to identify the best stocks to buy. Over the years, InvestorPlace’s research has helped millions get ahead of the curve. Our subscribers have enjoyed massive gains in tech titans long before they were kings.
Now, he’s ready to share with you the stock behind the next big development in communication. The company has already inked deals with key mobile phone partners. But it’s bound to become its own king with an approach to mobile interaction that we’ve never seen before.
On the date of publication, Louis Navellier had a long position in TMUS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
