Shares of T-Mobile (TMUS 1.04%) rose 21.3% in November, according to data from S&P Global Market Intelligence. The U.S. telecom operator reported impressive subscriber gains during its third-quarter earnings report in the early part of the month. Shortly after, T-Mobile got an additional boost when Warren Buffett conglomerate Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) reported it had taken a position in the stock during the third quarter as well.
In the third quarter, T-Mobile once again led the telecom industry in postpaid net additions as well as postpaid phone net additions. Revenue rose 74%, thanks to the April merger with Sprint, and profits also beat analyst expectations, as the company made better-than-expected progress on merger synergies.
In the wake of the Sprint merger, T-Mobile now has the deepest 5G spectrum portfolio in the U.S. telecom industry, which could allow the company to gain market share in 2021 and beyond. It has beaten expectations in the two quarters since the merger, despite lower industry churn during the pandemic, which has fueled optimism it will continue to take market share due to its newfound network capabilities and low-cost "Uncarrier" ethos.
The company appears to have won over a fan in Warren Buffett, or at least one of his investing lieutenants Todd Combs or Ted Wechsler. In November, Berkshire Hathaway released its 13F filing, revealing its buys and sells during the third quarter. The conglomerate bought roughly 2.4 million T-Mobile shares during the third quarter, showing that Berkshire, known for its investments in safe, wide-moat stocks, believes T-Mobile's newfound 5G capabilities are for real.
With the U.S. telecom industry just at the beginning of its transition to 5G, T-Mobile's impressive November gains could be the start of things to come. Not only could the 5G transition open up more market share for T-Mobile in wireless, but the new technology might also open up parts of the consumer broadband sector as well.
That's another highly profitable industry in which current customers have limited choices due to the capital-intensive wired-to-the-home solutions of today. However, 5G may allow T-Mobile to take some share in broadband, especially rural areas where there are limited, low-speed offerings. In October, T-Mobile announced it was expanding its LTE home broadband pilot to 450 cities and towns in rural and suburban America.
If T-Mobile can make inroads into broadband and cable TV as well as wireless, then November's gains could be just the beginning.