T-Mobile has had some pretty big momentum in 2015, and even in 2014. They’ve added 27 million customers since the Uncarrier movement started when John Legere took over as CEO in late 2012. Investors are worried that the momentum might drop a bit in 2016, however analysts disagree. Some analysts are stating that T-Mobile’s momentum will continue in the new year. Analysts at investment firms MoffettNathanson and Barclays sent out research notes this week, regarding their thoughts on T-Mobile’s momentum. Noting that there is a recent spike in the bad debt expense from T-Mobile. However, Craig Moffett noted that the debt stems from some larger write-downs that are actually associated with higher-end phones. And not an increasing frequency of hardware write-downs. Moffett explained that the distinction is pretty critical, especially for investors.
Moffett also noted that they expect T-Mobile to exceed expectations in terms of growth. He also expects the company to exceed expectations for free cash flow and profitability. Barclays’ analysts also echoed what Moffett said in his research note. Stating that T-Mobile’s aggressive promotions and their push into new markets with their band 12 LTE, will help the company continue to grow its number of users, and not just the number of connections. Noting that, “we expect ARPU trends to remain relatively stable as year-over-year churn improves and bad debt expense gradually gets better through more proactive initiatives from management.”
However, when it comes to Sprint, the analysts from both firms weren’t as bright in terms of their expectations. Noting that, for Sprint, bankruptcy is still “very real”. And that’s due to the amount of cash they are burning at a pretty fast rate. Since Marcelo Claure took over Sprint in 2014, the company has started a turnaround, but it’s not nearly enough for the company just yet. They’ve invested heavily into their network, and have also been pretty aggressive in promoting their product and attempting to bring in new customers. But haven’t had the same results that T-Mobile has had. Now it’s worth noting that analysts aren’t always right, but this is what they get paid to do. Is to keep an eye on the industry and tell their clients when they should invest in a company.