Due to expenses related to their merger with Sprint, T-Mobile US, Inc. has had negative EPS for three years in a row. Due to management's successful handling of the integration, TMUS is well-positioned to start reaping the rewards of their merger with Sprint. Since 2020, TMUS has spent a lot of money attempting to merge the two businesses. With approximately $4.9 billion in merger-related costs, 2022 was the most expensive year to date. This procedure has hurt the company's bottom line, but the corporation is now moving towards a situation where the advantages will start to exceed the disadvantages.
The management anticipates that the final $1 billion in merger-related costs will be mostly recovered by the end of 2023, according to the most recent annual report. However, according to latest management projections, merger synergies will be realised in the range of 7.3 and 7.5 billion in 2023. Overall, it appears that the merger went fairly well because management was able to keep expenditures under control for three to four years while also adding 40 million new users to its platform. As a result, I predict that TMUS's financial performance will significantly increase during the coming years.
Nonetheless, there are still some risks to the company itself. In the industry where TMUS competes, there are only a few dominant companies. Profitability can suffer if several smaller firms are successful in breaking into the market. Their debt-to-equity ratio right now is 1.64x. Despite not being ideal, it is not out of the ordinary for the sector. 9.8 billion in current debt and 9.6 billion in cash are held by the corporation. However, with over 98 billion in long-term debt, it is the majority of the debt. Despite these dangers, TMUS expects to boost profitability in 2023 as a result of cost savings and increased synergies from their most recent merger.
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