SAN FRANCISCO - T-Mobile US, Inc. (NASDAQ: NASDAQ:TMUS) outlined a comprehensive three-year growth strategy at its Capital Markets Day event, aiming to boost its financial metrics significantly by 2027. The company's senior leadership team presented plans to build upon its network, customer service, and digital transformation to drive profitable growth and shareholder returns.
T-Mobile's strategy includes extending its network leadership through advanced technology deployments like Massive MIMO and the first broad deployment of 5G Advanced in the U.S. The company has also announced collaborations with NVIDIA (NASDAQ:NVDA), Ericsson (BS:ERICAs), and Nokia (HE:NOKIA) to create an AI-RAN Innovation Center, which will integrate AI and RAN innovations for enhanced network experiences.
In customer experience, T-Mobile is leveraging AI and digital tools to transform interactions, aiming for digital completion of most customer activations and upgrades. A partnership with OpenAI will develop a predictive AI platform named IntentCX, which is expected to reduce customer contacts to Care by 75%, improving satisfaction and reducing operating costs.
The company also plans to grow its core wireless business by capturing market share in underpenetrated segments. T-Mobile for Business is set to focus on small to mid-market companies and deliver advanced solutions to enterprise and government customers.
In the broadband sector, T-Mobile aims to reach 12 million 5G broadband customers by 2028, with a fiber partnership expected to pass 12 to 15 million households by the end of 2030. The company anticipates an internal rate of return of around 20% from its fiber joint ventures.
Financially, T-Mobile forecasts service revenue growth to accelerate at a compound annual growth rate (CAGR) of approximately 5% from 2023 to 2027, with expected service revenues of $75 to $76 billion in 2027. The company also projects a nearly $10 billion increase in annual Core Adjusted EBITDA by 2027, with a CAGR of about 7% from 2023 to 2027. Adjusted Free Cash Flow is expected to reach $18 to $19 billion in 2027, marking a CAGR of 8% from 2023 to 2027.
To balance capital allocation, T-Mobile plans to maintain a 2.5 times leverage target and anticipates $9 to $10 billion in annual capital expenditures to fund network leadership. The company is also committed to stockholder returns through dividends and share repurchases.
The Board of Directors has declared a cash dividend of $0.88 per share, payable on December 12, 2024, to stockholders of record as of November 27, 2024, representing a 35% increase from the previous quarter.
This article is based on a press release statement from T-Mobile, which provides a detailed view of the company's financial aspirations and strategic initiatives for the coming years.
In other recent news, T-Mobile has taken significant strides in AI and telecommunications. The company has partnered with NVIDIA, Ericsson, and Nokia to establish the AI-RAN Innovation Center in Bellevue, Washington, aiming to enhance 5G capabilities and customer experiences. In addition, T-Mobile and OpenAI have announced a multi-year partnership to develop an AI-based customer service platform, IntentCX, set for launch in 2025.
T-Mobile has also retained its Buy rating from TD Cowen, which highlighted key areas for the company's upcoming Capital Markets Day event. KeyBanc Capital Markets expressed confidence in T-Mobile, raising its price target on the stock from $190 to $230, reflecting recent acquisitions.
However, the company faced a $60 million fine by the Committee on Foreign Investment in the United States due to non-compliance during its acquisition of Sprint Corp. Despite this, T-Mobile reported a 4% increase in service revenues to approximately $16.4 billion, and a 9% rise in Adjusted EBITDA to nearly $8.1 billion. Peter Osvaldik, T-Mobile's CFO, has secured his position until 2026, with his compensation package tied to pre-established performance goals. These are among the recent developments for the company.
InvestingPro Insights
T-Mobile US, Inc. (NASDAQ: TMUS) has been demonstrating a strong financial performance, as evidenced by its recent market data. With a market capitalization of $231.97 billion, the company is a prominent player in the Wireless Telecommunication Services industry. Its current P/E ratio stands at 24.53, which is considered low relative to its near-term earnings growth. This is further supported by a PEG ratio of 0.42, indicating potential for future earnings growth relative to the share price.
InvestingPro Tips highlight T-Mobile's perfect Piotroski Score of 9, suggesting that the company's financials are healthy across the board. Moreover, analysts predict the company will remain profitable this year, which aligns with the company's own financial forecasts and growth strategy. T-Mobile's stock has been trading near its 52-week high, reflecting a large price uptick over the last six months, with a six-month price total return of 26.68% and a year-to-date price total return of 27.83%.
For those interested in more in-depth analysis, InvestingPro offers additional tips on T-Mobile, which can be accessed at https://www.investing.com/pro/TMUS. With 10 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.