T-Mobile US IncTMUS126,37 $
T-Mobile US (NASDAQ: TMUS) is a U.S. wireless carrier. The company is considered one of the main beneficiaries of the development of 5G. And it's even more frustrating., that its shareholders do not lose anything.
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What do they earn
TMUS is a wireless carrier, providing both telephone services, as well as Internet connection services. His annual report gives a good idea of the company's business..
According to him, by type of customers revenue is divided as follows:
- Services. This includes internet and internet access services. By type of customers, the revenue of this segment is divided as follows::
- clients, who pay for services after the fact, — 73%. Mobile communication gives 91,99% revenue in this sub-segment, but the rest 8,01% – these are other services, in particular, device insurance and other services using third-party facilities. TMUS acts here as a reseller;
- clients, who use the services of a prepaid company, — 17%;
- wholesale services and more — 10%. Providing services to other operators for the use of the company's frequencies and equipment.
- Equipment - 25,87%. This is the proceeds from the sale or leasing of the company's telecommunications equipment and accessories..
- Other - 1,28%.
The company operates only in the USA and Puerto Rico.
Arguments in favor of the company
Leadership. It is possible and necessary to say a lot of good things about the 5G communication standard, but the main thing is that it is much faster than the alternatives available on the market. TMUS invested a lot in this area and eventually became the market leader in 5G.: it has a huge coverage area and breakneck speeds.
This is good from the point of view of business prospects, and will also attract investors to the company's shares.
P / E companies — 55, this is quite justified and even understated from the point of view of investors, because almost everyone in the investment community seems to, that "5G is the future". Therefore, P / E TMUS from this position can be and 100, And 200.
Agonal origin. China is one of the leaders in the introduction of 5G, and because Americans are so easily on the path of competition, think of the lunar program and cold war-era Star Wars., - then I'd expect, that large institutional investors will keep TMUS quotes afloat. Just to stimulate investment in this industry.
It is important, because TMUS's capitalization is truly leviathan — $162.2 billion. So,, it is not worth hoping for pumping the company with a crowd of retail investors.
Report - Offset. Recently, the company reported much better than expected., and more importantly, it has a good growth rate of users and a very low level of their outflow.. This means, in the medium term, in four to five years, the company can start paying dividends to its shareholders.
What can get in the way
5You can't put G in your pocket. TMUS does not pay dividends, which greatly reduces the attractiveness of its shares. What is the difference to the average investor?, that the issuer shows a combination of good growth rates and the stability of the base of the business itself, if the investor himself does not lose anything from this?
The blatant meaninglessness of the whole venture. The great philosopher Vaas Montenegro once correctly noted, that madness is the repetition of the same action in the hope of doing so., that at some point it will turn out to be a different result from the existing one.
The drama of the "transition to 5G" in the case of directly providers and telecoms is that, that they spend a lot of money on it, but users are in no hurry to switch to new ones, more expensive communication standards, which one way or another forces telecoms to adjust prices and tariff plans. I'm even silent about that, that 5G connection is only supported on expensive phones, — this somewhat limits the implementation space of the technology.
And that, 6G will be implemented in the remote future – and history will repeat itself. Telecoms will spend a lot of money again, slightly increase revenue. I do not rule out the fact that, that TMUS and other companies will be able to convert 5G adoption into higher revenue and profits, but for now it seems to me, that old history will repeat itself.
I paraphrase the famous Stoic philosopher Chernomyrdin. Everybody thinks, that after the mass introduction of 5G, something will happen. And there will be nothing.. And that's the market..
Accounting. The company has a very large amount of debt - more than $ 140 billion. Of these, only 21.423 billion need to be repaid during the year., and the money at the disposal of the company is noticeably less than this amount..
Don't forget, that the transition to 5G is not a cheap pleasure. So TMUS will have more and more debts., which can't help but upset investors: such amounts of debt will prevent the company from introducing dividends and scare off potential shareholders..
However, the US leadership has a political motivation - the company will receive the necessary funding if necessary. But I'm afraid, that such large debts will prevent the company from implementing dividends in a significant amount.
Cool the compound. High credit of trust TMUS, issued by investors, is based on the expectation of rapid introduction of the 5G standard in the United States. But the problem is, that the 5G signal intersects with the operation of aircraft, because of what the introduction of this standard in the United States is slowed down.
I do not think, that this would dramatically affect TMUS directly, but the quotes may not be affected in the best way, as investors associate TMUS with this technology.
Resume
8 February 2021 I took these shares at the price of 125,28 $, despite the already heavy price, to test the hypothesis of investor insanity and greed. I was hoping, that stocks will be able to grow over the next 19 months to 150 $ solely on the interest of investors in 5G. In July 2021, they cost 149,25 $, slightly short of the target price.
Now the company is definitely not cheap.: P / E above 59. It seems to me, it is worth postponing the purchase. But, may be, I'm wrong and the hype around 5G will pump up these stocks and let them rise above historic highs..
