T-Mobile US (TMUS 0.02%) is ready to join its fellow telecom giants in becoming a massive cash cow.

Management provided an updated outlook for the full year with its third-quarter earnings report, and it suggests free cash flow of about $2 billion for the fourth quarter. That's an 80% increase from last year.

Fueling that free cash-flow growth is the completion of its integration with Sprint, which comes with some hefty expenses. With that behind it, full-year 2023 free cash flow is about to explode.

Climbing into the same stratosphere as its peers

T-Mobile could see its free cash flow climb to levels comparable with AT&T and Verizon Communications next year.

Over the last four quarters, T-Mobile spent $3.8 billion in cash on merger-related expenses. If you simply add that amount to its 2022 outlook, it'll generate $11.2 billion to $11.4 billion in free cash flow next year.

T-Mobile's also further along in its buildout of its 5G network with a much better spectrum portfolio than Verizon or AT&T. That could lead it to slow its capital expenditures even further as it doesn't have as much work to do in building out the network. Indeed, analysts at Raymond James expect T-Mobile to cut around $2.5 billion in capital expenditures next year.

That all adds up to the low end of management's previous guidance for $13 billion to $14 billion in free cash flow in 2023. And that's without any top-line growth. And while growth is relatively slow in the telecom industry, it's building on a revenue base of $80 billion. So just a few percentage points of revenue growth can translate into significant improvements in free cash flow next year.

T-Mobile could easily exceed its previous guidance for free cash flow in 2023. That could put it within shouting distance of AT&T and Verizon, which have been throwing off tons of cash for years. AT&T previously guided for $20 billion in free cash flow next year, but analysts expect more like $17 billion after it's failed to translate subscriber growth into free cash flow growth in recent quarters. Likewise, Verizon guided for $20 billion to $22 billion in free cash flow for 2023, but it's unclear if it can meet that goal either as retail subscriptions decline.

It's also worth pointing out that T-Mobile's cash flow can go a lot farther since it's not nearly as burdened with debt. It has about $70 billion in net debt compared to around $130 billion in net debt for both AT&T and Verizon.

Where does T-Mobile go from here?

There are a lot of options for T-Mobile with all the cash it's going to start generating.

It's already committed to returning $14 billion to shareholders through a share repurchase program. Management previously planned to repurchase $60 billion in total by 2025.

The stock has a current market cap less than $190 billion, and about half of it is owned by Deutsche Telekom, which has no intention of selling shares. That means T-Mobile could retire nearly two-thirds of its outstanding float by 2025. That'll provide a huge support for its stock price, not to mention a significant boost to earnings per share.

With the share repurchase plans, it seems unlikely T-Mobile will start issuing a dividend before 2026. But it does expect to generate over $18 billion in free cash flow that year. With fewer shares to pay, it could start providing a substantial dividend at that point.

T-Mobile may also look to invest more in its home internet business. It's currently taking a capital-light approach, using excess capacity on its 5G wireless network to provide fixed-wireless access in the home.

But considering the positive impact on subscriber retention and service revenue growth, it may be worth investing in ways to serve more customers with home internet. The company is already experimenting with fiber to the home and exploring options to expand on that. A bigger home internet business could put it on even more competitive footing with AT&T and Verizon, which both offer their own home internet services.

As T-Mobile unlocks the massive free-cash-flow growth ahead of it, investors should benefit from management's capital return plans as well as the greater freedom it provides management to invest in the next stage of growth for the company.