T-Mobile US

Shares of US wireless carriers are trading lower after SpaceX agreed to purchase low-band 800 MHz spectrum licenses from Grain Capital, which Grain recently acquired from T-Mobile. SpaceX also says Starlink will build a terrestrial wireless network to supplement satellite with indoor coverage.

Why it matters: SpaceX's potential impact is a key valuation factor across the telecom industry. This development increases the odds that SpaceX will build a rival terrestrial network, but it still has a long way to go to assemble the assets needed to credibly do so. T-Mobile sold these 800 MHz licenses as part of its Sprint acquisition. The licenses cover about 6% of the low-band spectrum allocated to the US wireless industry. Verizon, which has the weakest low-band position among the Big Three carriers, holds more than 3 times the low-band spectrum depth in most areas. SpaceX will need to continue acquiring spectrum across all bands and build out thousands of sites to match the coverage of the major wireless carriers. We believe this would be a poor use of capital given the wireless market's maturity and SpaceX's other investment needs, but it has very deep pockets.

The bottom line: Our fair value estimates on US telecoms are intact. Our base case remains that Starlink will not threaten T-Mobile, Verizon, or AT&T's wireless operations. However, SpaceX's latest move has widened the range of potential outcomes and skewed it to the downside. We move our Uncertainty Ratings to High from Medium for the Big Three. SpaceX entering the wireless market is the worst-case scenario and could hurt the carriers in other ways, like driving up spectrum prices. We believe it remains in a battle with the wireless carriers for network access. All three remained resolute that they will not provide wholesale network capacity to a satellite rival.

Correction (Oct. 9, 2026): This note has been updated to reflect that T-Mobile was not forced to sell the 800 MHz licenses as previously reported.

Our $235 fair value estimate implies an enterprise value equal to about 9.3 times our estimate of 2026 "core adjusted" EBITDA, which eliminates integration costs and phone lease revenue. Our fair value estimate also equates to a 7% free cash flow yield based on management's 2026 forecast.

We expect customer growth across the postpaid wireless market to slow in the coming years and that T-Mobile will steadily shift its focus from customer acquisition to pricing gains. We expect T-Mobile will add 2.5 million net postpaid phone customers in 2026, down from 3.3 million added in 2025. We then expect a gradual decline in customer additions in subsequent years, but with revenue per customer growing more meaningfully. Tracking this expectation will be difficult as T-Mobile plans to no longer disclose individual customer data.

We expect growth in the fixed-wireless broadband business will slow faster than management believes, but we still model T-Mobile reaching more than 13 million customers over the next decade. In total, we estimate wireless service revenue will grow about 5% annually through 2030, including a benefit in 2026 from the US Cellular and fiber broadband acquisitions.

We estimate T-Mobile’s adjusted EBITDA margin, which excludes integration costs, was about 39% in 2024 and 38% in 2025. The firm has realized most of the savings expected from the Sprint merger, but we expect margins to still increase to about 42% by 2030. A slowdown in customer additions relative to the size of the firm should provide a natural lift to margins. Offsetting these gains, we expect network operating costs to steadily increase as the firm adds cell sites to increase capacity. Adding fiber broadband customers will pressure margins as T-Mobile pays network owners, including its joint venture partners.

Forecasting capital spending from year to year is tricky, as network investment projects are often at management’s discretion. T-Mobile’s capital spending peaked in 2022 at nearly $14 billion with the Sprint integration and deployment of midband wireless spectrum. Management expects to spend $9 billion-$10 billion in annual capital investment for the foreseeable future. We expect spending to rise above this range in 2028 and gradually increase from there as capacity additions require increased network densification, and rising network and labor costs generally force investment higher. The firm won’t likely ever fully match spending at AT&T or Verizon, as these rivals rely heavily on their own fixed-line networks, which T-Mobile generally leases.

We expect that the costs to acquire spectrum licenses in the 2.5 GHz band that are currently leased will ramp up later this decade and into the 2030s and that these payments have a present value of about $10 billion. We also expect T-Mobile to regularly purchase smaller blocks of spectrum annually, in addition to two $10 billion outlays at spectrum auctions over the next five years. Finally, the potential for elevated spectrum and network investments factors into our assumption that T-Mobile generates modest returns on capital beyond our explicit forecast.

The Sprint merger solidified T-Mobile’s position in a healthier industry structure that now includes three similar-size dominant wireless carriers. We believe the firm is worthy of a narrow moat rating, primarily reflecting the efficient scale attributes of the wireless market.

T-Mobile’s turnaround over the past 15 years has been impressive. When the merger with MetroPCS closed in 2013, the firm’s network lagged Verizon's and AT&T's, and its reputation with consumers was weak. Following the Metro merger, the firm pursued additional high-quality spectrum and deployed new wireless technologies, dramatically improving network performance. Paired with network improvements, the firm marketed its services brilliantly, in our view, carving out a position in opposition to other providers as the "uncarrier."

A significant portion of wireless network and operating costs are either fixed or more efficiently absorbed as network utilization reaches optimal levels in more locations. The Sprint acquisition added something T-Mobile likely would have needed a decade or more to build on its own: scale to match AT&T and Verizon.

Verizon, AT&T, and T-Mobile now dominate the US wireless market, claiming roughly 90% of the retail postpaid phone market. The benefits of fixed-cost leverage and the difficulty of providing a differentiated wireless offering create an efficient scale advantage in the wireless industry. The massive consolidation across the industry over the past two decades and the inability of several interested parties, including EchoStar and Comcast, to enter the market with networks of their own provide evidence of efficient scale.

Advertising expenses provide a clear example of the benefits of scale in the wireless industry. Historically, we estimate that Verizon Wireless spent more on advertising than T-Mobile, but that T-Mobile spent about 30% more on a per-customer basis. T-Mobile’s ad spending hit $3.7 billion in 2025, up from $1.6 billion in 2019 before the Sprint merger, but both figures totaled about 4% of revenue. Other marketing efforts, like maintaining a nationwide retail store base and negotiating phone prices, offer similar scale benefits.

EchoStar's decision to shut down its wireless network and sell off spectrum licenses provides the most recent evidence of efficient scale. The firm held a large swath of wireless spectrum for more than a decade but was never able to build a wireless network comparable to the Big Three. It has remained an extremely small player in the wireless market, struggling to grow the Boost business it acquired from Sprint. EchoStar now plans to resell service on AT&T's network.

As for the cable companies, we don’t believe their long-term wireless plans are well formed. Comcast and Charter jointly bid on wireless spectrum during the Federal Communications Commission's C-band auction in 2020 but walked away empty-handed. The cable companies will likely keep pushing into the wireless resale business to maintain strategic options, but they will need to rely on one of the major carriers for capacity for the foreseeable future.

SpaceX is threatening to build a terrestrial wireless network to enter the traditional wireless market. We believe entry would generate very poor returns on capital, for the reasons above, but the firm has extremely deep pockets and could choose to push forward anyway.

Satellite technology presents the latest threat to the efficient scale attributes of the wireless business. We don't believe satellite providers like SpaceX will be able to amass the wireless spectrum needed to provide capacity similar to the terrestrial wireless network today. In addition, no amount of spectrum can easily overcome the challenges of providing reliable coverage from a satellite without a clear line of sight to the sky.

Satellite or other technologies could advance to the point that replicating today's wireless networks becomes economically viable, which limits our moat ratings on the wireless carriers. But we don't believe it is likely that these technologies will be developed and deployed at scale over the next decade.

After several years of unprecedented success, T-Mobile’s reputation with consumers is as strong as ever. In an increasingly rational competitive environment, the firm will continue growing market share while increasing revenue per customer.

T-Mobile holds ample scale to compete and a spectrum portfolio no carrier can match. Heavy network investment following the Sprint merger has given the firm a big network lead.

Free cash flow should continue to grow sharply, providing the ability to buy back shares while growing the dividend aggressively.

T-Mobile will eventually need to step up network investments to keep pace with AT&T and Verizon, which have dense fixed-line networks at their disposal. A costly acquisition could be necessary.

Comcast and Charter are attacking the wireless market. These cable rivals will get more aggressive as their wireless networks expand.

Spectrum licenses in the 2.5 GHz band, which form the core of T-Mobile's spectrum position, are leased, not owned. The firm will need to acquire these licenses in the coming years or face rising lease costs.