As the new year begins, T-Mobile is in high spirits thanks to two recent developments that have boosted its prospects. The carrier has secured some more mid-band spectrum licenses, thanks to a new law that will allow the FCC to transfer them to T-Mobile, expanding its coverage to 81 million additional Americans, mostly in rural areas. LightReading reports that T-Mobile is expected to get these licenses by mid-March.
TD Cowen analysts commented on this news by saying to their clients, “This is not a game changer, but a modest win for T-Mobile.” Michael Alcamo, president of the New York-based investment bank M.C. Alcamo & Co, said, “T-Mobile has now acquired the nationwide [spectrum] inventory it needs to fully deploy 5G across the country, except for a few channels in some key markets and the state of Maine.”
T-Mobile CEO Mike Sievert announced in September that the country’s second-largest wireless provider had already installed some of the radios for the new spectrum. “When we receive those licenses, we can activate all that spectrum and reach 50 million people within two days,” Sievert said. That leaves 31 million people out of the total covered by the new spectrum, which means that the carrier will have to pay Nokia and Ericsson, its main 5G radio suppliers, to install more equipment.
T-Mobile won the 7,156 licenses in the FCC Auction 108, which involved 2.5GHz spectrum. The FCC had to wait for a new law that would restore its authority to conduct auctions before it could hand over the spectrum licenses to T-Mobile.
The other reason that T-Mobile executives celebrated the holidays with joy was the transfer of 49 million T-Mobile shares to SoftBank. The shares were worth $7.6 billion. The deal was part of the 2020 agreement between T-Mobile and SoftBank, related to T-Mobile’s acquisition of Sprint. The deal stipulated that the transfer would happen if the stock’s weighted volume average exceeded $150 per share for 45 days.
Investment bank Raymond James said, “The potential share issuance had been a drag on the stock and created an artificial cap for a while, and we believe some investors had been systematically and automatically shorting the stock as it neared the ~$150 trading level at various times. We think this artificial cap for the stock had annoyed many investors, but it also enabled the company to buy back stock at lower prices.”
Indeed, over the past month, T-Mobile’s shares have increased by 5.96% and have broken through the $150 level where the professionals had been selling the stock. T-Mobile’s shares closed today at $161.91, up $1.58 or 0.99%. T-Mobile is now the third-largest wireless carrier in the US by market capitalization, behind AT&T and Verizon, according to Statista.