Please ensure Javascript is enabled for purposes of website accessibility

Why T-Mobile Stock Gained 13.9% Last Month

By Anders Bylund - Mar 7, 2020 at 7:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The long-suffering merger with Sprint brushed aside the final major challenge in February, setting the stage for the final John Hancocks.

What happened

Shares of T-Mobile US (TMUS 0.84%) rose 13.9% in February, according to data from S&P Global Market Intelligence. The North American cell network operator cleared the last major hurdle on the way to completing a merger with smaller rival Sprint (S).

So what

U.S. District Court Judge Victor Marrero ruled against a lawsuit filed by several state attorneys in a bid to stop the $28 billion merger. The suit argued that the deal would reduce competition and raise prices in the American telecom sector, but Marrero disagreed. The proposed deal "is not reasonably likely to substantially lessen competition" in the wireless markets, he said, arguing further that Sprint probably wouldn't last long as a fourth nationwide competitor without this merger, and that DISH Network (DISH 11.60%) should be able to become that fourth major competitor when Sprint and T-Mobile offload their prepaid wireless services to the satellite broadcasting veteran.

A wooden gavel hitting a handful of puzzle pieces that aren't fitting together.

Image source: Getty Images.

Now what

The court also noted T-Mobile's status as "a maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes." The state attorneys worried that T-Mobile would raise prices or remove network features once the merger has been signed, but the company has a history of doing the exact opposite.

"The proposed merger would allow the merged company to continue T-Mobile's undeniably successful business strategy for the foreseeable future," the judge wrote.

The merger is now entering the home stretch, with only a couple of minor challenges left to settle. T-Mobile's investors embraced the ruling, and Sprint's shares more than doubled in February. T-Mobile is getting its hands on Sprint's valuable wireless spectrum licenses just in time to make the most of the 5G era and the related explosion of 5G-connected Internet of Things devices.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
$137.08 (0.84%) $1.14
Sprint Corporation Stock Quote
Sprint Corporation
DISH Network Corporation Stock Quote
DISH Network Corporation
$18.85 (11.60%) $1.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.