Yesterday, T-Mobile US, Inc. TMUS announced the completion of its previously-stated divestment of Sprint’s prepaid wireless business to DISH Network DISH. With this, the Bellevue, WA-based wireless carrier fulfills a major commitment made to the Department of Justice and the Federal Communications Commission as part of the merger.
The divestment of Sprint’s prepaid business represents more than 9.3 million customers. T-Mobile will receive about $1.4 billion subject to a customary post-closing working capital adjustment. With this transaction, T-Mobile and DISH entered into other ancillary agreements that include a spectrum purchase agreement.
Per the deal, the divested prepaid customers and DISH’s new wireless customers will have access to the new T-Mobile network in a phased approach. This will be achieved through a mobile virtual network operator arrangement as well as an infrastructure mobile network operator. This will enable roaming in certain areas until DISH’s 5G network is ready.
On Apr 1, T-Mobile completed its merger with Sprint to create a new wireless giant that rivals AT&T T and Verizon VZ in terms of subscribers. The deal enabled T-Mobile and Sprint to join their high- and low-band spectrum for a faster nationwide 5G rollout. Also, T-Mobile completed its planned chief executive officer transition from John Legere to Mike Sievert ahead of schedule.
Meanwhile, T-Mobile is making investments to build its nationwide 4G LTE network. The company’s 600 MHz 5G covers more than 215 million people including the cities of Detroit, St. Louis and Columbus while 50 million new T-Mobile devices have access to the 600 MHz LTE network. It has deployed 5G sites in Philadelphia and New York City using Sprint’s 2.5 GHz mid-band spectrum on its 5G network.
On Jun 1, T-Mobile achieved an important milestone by offering 5G services across all 50 states in the country. The company partnered with General Communication Inc., a leading telecommunications operator in Alaska, to provide 5G connectivity in Anchorage. T-Mobile’s 5G networks are likely to lower the cost of delivering a gigabyte data, providing economic incentives to reduce prices.
The company intends to offer the same services at a discounted rate for three years. The revamped T-Mobile will compete for consumers at all price points. Customers, including prepaid and Lifeline, will have access to the same 5G network and services. T-Mobile’s commitment to building the world’s best nationwide 5G network will likely bring super-fast speeds to urban areas and underserved rural communities. The combined company’s network will have 14 times more capacity than on a standalone basis, which enables it to leapfrog the competition in network capability and customer experience.
Customers will have access to average 5G speeds up to eight times faster than LTE in a few years and 15 times faster over the next six years. The company is expected to provide 5G to 99% of the U.S. population and average 5G speeds above 100 Mbps to 90% of the population. T-Mobile’s business plan is built on covering 90% of rural America with average 5G speeds of 50 Mbps, up to two times faster than broadband.
T-Mobile’s shares have rallied 35.8% against 11.1% decline of the industry in the past six months. The company has a long-term earnings growth expectation of 18.9% compared with 10.6% of the industry.
T-Mobile currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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