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Guggenheim Underwhelmed By T-Mobile's New TV Service Plan

Priya Nigam

T-Mobile US Inc (NASDAQ: TMUS) unveiled a part of its new strategy in the cable TV industry Wednesday, with the service scheduled to launch April 14 in eight markets.

The latest announcement — which comes in the wake of Viacom (NASDAQ: VIA)'s content agreement — is little differentiated from the many offers available in the market and comes with a “synthetically bundled” price that is much higher than what is charged by telcos and MSOs, according to Guggenheim Securities.

The Analyst

Mike McCormack maintains a Buy rating on T-Mobile.

The Thesis

While it’s probably too early to draw significant inferences into T-Mobile's longer-term ambitions, the recently announced cable plan is uncharacteristic for the "uncarrier" and most unexciting, McCormack said in a Wednesday note. 

Consumers are going asset-light, which translates to significant CPE cost savings for PayTV providers, the analyst said. Against this backdrop, it’s surprising to see T-Mobile aiming to compete in the “thin-client” battle with its Layer3 TV division, he said. 

Consumers already have extensive choices, and it may have been better for T-Mobile to focus on an app-only service, McCormack said. The offering is undifferentiated in a crowded market, the analyst said, adding that the synthetic bundle price point is unlikely to attract significant interest.

While the launch begins in eight markets, T-Mobile plans to offer its streaming service nationwide in the back half of 2019.

Price Action

T-Mobile shares were trading up 0.87 percent at $72.79 at the time of publication Thursday. 

Related Links:
Guggenheim: T-Mobile Home Broadband Aimed At Boosting Sprint Merger, Not A Threat To Cable
A Preview Of T-Mobile's Q4 Earnings

Photo courtesy of T-Mobile. 

Latest Ratings for TMUS

Date Firm Action From To
Dec 2018 Raymond James Maintains Strong Buy Strong Buy
Oct 2018 Nomura Maintains Neutral Neutral
Oct 2018 Wells Fargo Maintains Outperform Outperform

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