Remarks uttered by the CEO of T-Mobile US (TMUS -6.12%) on Monday weren’t exactly well received by investors. Absent any other market-moving news about their stock, they traded out of the No. 3 mobile carrier assertively. By the end of the day, its price had sunk by more than 6%, notably worse than the 0.6% drop of the S&P 500 index.
Fourth-quarter caution
Speaking at the UBS Global Media and Telecommunications conference Monday, T-Mobile US Chief Mike Sievert essentially said his company’s investors should prepare for some discouraging news coming down the pike. Specifically, he warned that certain factors will act as tailwinds on the telecom company’s results, and some figures won’t be as good as they were in the third quarter.
Much of this has to do with an anticipated slowdown in customer additions, which Sievert described as notching a “decade-long record” in said quarter. The company’s performance in this aspect of its business was indeed strong, with net “adds” of 865,000 subscribers in that period.
This development was a key factor in T-Mobile raising a clutch of metrics in its full-year 2024 guidance, including customer additions, net cash from operations, and non-GAAP (adjusted) free cash flow.
The market overreacts
This shouldn’t necessarily come as a shock to investors or telecom industry watchers. As a whole, the U.S. market is relatively saturated, and the game now is to find new income streams from existing customers — hence, the promotion of products such as home internet service. I think a relatively softer quarter isn’t surprising given how robust No. 3 was in many respects, and I feel T-Mobile US bulls should stay the course and not get discouraged.
