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What's Next for T-Mobile?

By Motley Fool Staff – Apr 29, 2019 at 1:16PM

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The company isn’t standing pat while it waits for federal regulators to rule on its merger plans.

While T-Mobile (TMUS -1.20%) waits for federal regulators to rule on its $26.5 billion merger with Sprint (S), it's not simply biding its time. The company has rolled out a new cable service and introduced a banking service. That leaves the company in a very strong position even if the merger gets shot down.

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This video was recorded on April 23, 2019.

Shannon Jones: For T-Mobile, they've added more than a million customers now for I believe it's 23 consecutive quarters, which is pretty impressive. And let's not forget, T-Mobile is also planning to roll out a TV service. This merger with Sprint greatly expands that base as well. For T-Mobile, there's so much good happening right now.

Dan Kline: T-Mobile this week unveiled a banking service, which will help people that don't have a checking account not only get easy access to banking, but have a certain level of overdraft protection, no minimum balances, no fees. I've been underwhelmed by their cable offering, but I think that will change when 5G rolls out and it becomes something you use over your phone rather than what we've seen so far as the at-home version, which really looks a lot like cable. But T-Mobile is a company that's constantly trying to find new ways to make consumers happy. AT&T and Verizon... I'll put this nicely, it doesn't feel like that is baked into their DNA.

Jones: [laughs] Very good point, Dan! Totally agree. To close out this segment, where would you put the likelihood of this deal closing? Would you say it's a 50-50 shot at this point? Where are you at?

Kline: I think T-Mobile will make whatever reasonable concessions need to be made to make this deal. If the federal regulators who are looking at it want price guarantees, or a speed of 5G rollout guarantee, or whatever it is, I think T-Mobile is going to be very willing to do that. If they're stuck on the idea that there needs to be four companies, then I think what's going to happen is Sprint will make the merger happen the backdoor of going out of business, and maybe T-Mobile can acquire some of its assets. I think T-Mobile would acquire the vast majority of its customers organically -- which is, frankly, why I have some questions as to the value of this merger for T-Mobile in the first place.

Jones: Yeah, very good point. A lot to watch here in the coming months.

Daniel B. Kline has no position in any of the stocks mentioned. Shannon Jones has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.

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