Back to top

Image: Bigstock

T-Mobile (TMUS) Acquires Mint Mobile to Expand Customer Base

Read MoreHide Full Article

T-Mobile US, Inc. (TMUS - Free Report) has inked a definitive agreement to acquire Ka’ena Corporation for about $1.35 billion to consolidate its position as one of the leading wireless service providers in the country. The buyout will include Ka’ena subsidiaries and brands such as Mint Mobile – a budget wireless provider backed by actor Ryan Reynolds, Ultra Mobile – a wireless service provider catering to international calls, and Plum – a wholesale wireless solutions provider. The transaction is likely to be completed later this year, subject to the fulfillment of mandatory closing conditions and regulatory approvals.

Offering budget cell phone plans starting at $15 per month, Mint Mobile has established itself as a more affordable option for larger telecom companies. It utilizes the T-Mobile network as a mobile virtual network operator (MVNO), whereby it offers wireless mobile services using the latter’s communications network infrastructure without actually owning it. This, in turn, is likely to make the deal a seamless transition for its customers.

Post-acquisition, the brands will continue to use the T-Mobile network to serve their existing customers. The company intends to leverage its own supplier relationships and distribution scale to help the brands expand further, enabling them to offer competitive pricing and greater device inventory to more U.S. consumers seeking value offerings. The transaction will also facilitate T-Mobile to reach new customer segments and regions with complementary offerings.

T-Mobile is currently on a roll, witnessing a record customer increase in 2022, driven by 5G network strength and a differentiated growth strategy. The company registered 314,000 postpaid net account additions in the fourth quarter, bringing the tally for 2022 to a record-high figure of 1.4 million. Postpaid phone net customer additions were 927,000 in the fourth quarter, while prepaid net customer additions were 25,000 and 338,000 for the full year.

Total net customer additions were 1.8 million in the fourth quarter, bringing the tally to a record 6.8 million for 2022. The total customer count at the end of 2022 increased to a record high of 113.6 million as it extended its coverage across the length and breadth of the country. The proposed buyout of Mint Mobile will further increase its customer count in the long run.

Following its merger with Sprint, T-Mobile boasts an unrivaled bouquet of high- and low-band spectrum for a faster nationwide 5G rollout, undeniably disrupting the competitive landscape of the U.S. telecom market. To its credit, T-Mobile reportedly has the largest nationwide 5G network, with its Extended Range 5G covering more than 325 million people. The company is further strengthening its mid-band coverage by adding more towers and spectrum in places that already have 5G network connectivity.

Shares of the company have gained 12% in the past year against the industry’s decline of 15.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

T-Mobile currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1, is likely to benefit from the strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 12.7%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Juniper Networks, Inc. (JNPR - Free Report) carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 7% and delivered an earnings surprise of 1.6%, on average, in the trailing four quarters.

Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence.

InterDigital Inc. (IDCC - Free Report) , carrying a Zacks Rank #2, is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. The company aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience.

InterDigital intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position. It has a long-term earnings growth expectation of 11.4% and delivered an earnings surprise of 40.3%, on average, in the trailing four quarters.

Published in