A month after T-Mobile and Sprint called off merger talks, Bellevue-based T-Mobile announced that its board has authorized a plan to repurchase up to $1.5 billion of the company’s common stock. In addition, Deutsche Telekom AG, which is the majority stockholder of T-Mobile, plans its own purchases of T-Mobile common stock.
The stock repurchases — set to occur through the end of next year — signal the company’s bullish outlook on its future. Many technology pundits have wondered what the future holds for the country’s third largest wireless carrier, behind Verizon and AT&T.
High-energy T-Mobile CEO John Legere — who last month said they could not find an arrangement with Sprint “that meets our high bar” — is optimistic about the opportunities ahead.
“Since launching Un-carrier, T-Mobile has delivered unmatched growth and continues to take share in a rapidly changing and competitive wireless industry,” Legere said in a press release today. “This repurchase program underscores our Board of Directors’ and management team’s confidence in our business and our commitment to creating value for shareholders.”
Citing a strong balance sheet and cash flow, Legere said that “2018 is going to be another exciting year in wireless and we can’t wait to get started.”
J. Braxton Carter, Executive Vice President and Chief Financial Officer, and Mike Sievert, Chief Operating Officer, are speaking right now about the repurchase program and other efforts at the 45th Annual UBS Global Media and Communications Conference in New York. A live webcast of the event is available here.
In the remarks, Carter said that T-Mobile will likely “blow through” the repurchase program and may consider “tuck in” acquisitions in the coming year. Those deals could include the purchase of smaller regional carriers, even though Carter admitted that few players exist in that realm now that they are “past the Sprint deal.”
Beyond that, the company said that they see expansion opportunities in three areas around convergence, leveraging the T-Mobile consumer brand and in business solutions.
Meanwhile, Sievert said that T-Mobile is “having a fantastic quarter” and “the formula is really working”as the brand resonates with a passionate group of wireless customers. Going forward, Sievert said that T-Mobile is in the enviable position where it can be both “growth driven” and a “cash generator.”
T-Mobile plans to expand into as many as 500 smaller U.S. cities, part of a rural expansion that will allow the company to bolster its presence in markets where it has not had a presence historically.
In the small business realm, Sievert said that “we are really kicking everyone’s ass here” as small business customers increasingly choose T-Mobile over AT&T and Verizon.
Citing the rural and small business expansion plans and the company’s strong organic cash flow, Carter concluded his remarks by noting that T-Mobile is “incredibly undervalued” — one of the reasons why they are confidently pushing forward with the stock buyback.
He said that T-Mobile has “an amazing cash generation story,” which “gives us incredible latitude to create value and do things that we haven’t been able to do in the past.
“I think extremely exciting times,” said Carter, adding that there are “good things to come.”
T-Mobile’s stock closed Tuesday at $60.96, and the shares are up nearly 12 percent this year.