Will “New T-Mobile” Secure the 5G Crown?
I don’t know about you, but it feels like the apocalypse in my house.
We have enough toilet paper and frozen pizza to last for weeks. And I’m working from home indefinitely.
Though it feels like the world has stopped, the economy sure hasn’t.
There are plenty of essential services that must continue to operate at peak performance, especially now – namely, wireless networks.
Millions of Americans are telecommuting for their jobs. And we’re pushing our wireless infrastructure to its limits.
That’s why now is the time to recognize up-and-coming titans in the 5G space. After all, heroes are born out of crisis.
Bigger and Better
On February 11, T-Mobile (Nasdaq: TMUS) and Sprint (NYSE: S) announced their union had been approved by a federal district court in New York. This means we will soon witness the creation of “New T-Mobile.”
The long-awaited merger was held up in court for more than a year. Cynics and skeptics believed the combined mega-carrier would lessen competition and drive up prices.
But New T-Mobile’s vision is not to increase pricing pressure on Americans. Rather, it’s to create the nation’s best and most reliable 5G network.
Profit Trends readers are already familiar with the fifth-generation fervor.
In short, 5G will supercharge network speeds and connectivity by at least fivefold. And it will connect people and businesses all over the country – from remote rural areas to densely populated urban ones.
Per New T-Mobile’s announcement, it plans to roll out all its 5G services while lowering the price of delivering data, providing a win-win for Americans.
Plus, much to the court’s approval, this will further challenge its peers, Verizon Communications (NYSE: VZ) and AT&T (NYSE: T), and nurture a healthy nationwide competition.
Of the rivals, New T-Mobile has the fewest customers. So it plans to ride the momentum from the historic merger by offering a superior network at more reasonable prices.
That goal is a strong indication of where its revenue and stock price will head in the following months and years.
Take a look at the chart below. It shows total revenue growth from when major mergers were finalized through their most recent earnings reports…
These were 10 of the largest mergers and acquisitions of the last decade – deals worth tens of billions of dollars. And, as you can see, they were ultimately profitable.
Revenue gains are mostly in the double digits, even reaching nearly 170%.
For a comparable merger like T-Mobile and Sprint’s, this is a promising precedent. And we can expect New T-Mobile to fall comfortably within this range.
Analysts are fighting for its success as well.
Editor Monica Alleven of FierceWirelessTech, a publication covering the wireless market, said, “The 5G network crown is T-Mobile’s to lose.” Meaning that New T-Mobile has everything it needs to succeed and prosper… if it plays its cards right.
And Craig Moffett of the research firm MoffettNathanson said, “[Verizon and AT&T] will face not only a diminished pool of available subscribers… but also a 5G network that is positioned to be better than what either AT&T or Verizon appears ready to offer.”
A Promising Precedent
As Chief Trends Strategist Matthew Carr says, share prices follow earnings. This means value stocks with strong fundamentals will, at the end of the day, bring home those life-changing gains.
So we’ll keep an eye on the New T-Mobile merger… and hope it follows in the profitable footsteps of its mega-merger predecessors.
Plus, who knows? Today’s crisis could be the catalyst for a stronger-than-ever wireless industry.
Stay safe and sanitized,
Rebecca