Analyst Note| Michael Hodel, CFA |
Though the Sprint integration and pandemic made for messy results, T-Mobile appears to have performed well during the second quarter. The firm added 253,000 net postpaid phone customers during the quarter, somewhat better than either Verizon or AT&T, but the carriers are treating nonpaying customers who remain connected under the FCC’s "Keep Americans Connected" pledge differently. Management’s outlook for the remainder of 2020 lines up reasonably well with our expectations, except for forecast net postpaid customer growth. It seems the firm expects to retain more Sprint customers than we had assumed, though it also wrote down the Sprint customer base far more than we expected as part of bringing the two firms’ accounting policies into alignment. At this point, we don’t expect to materially change our $89 fair value estimate and we view the shares as modestly overvalued.