T-Mobile US is a facilities-based wireless telephone carrier. The company is the result of the merger of Deutsche Telekom's T-Mobile wireless division with small regional wireless carrier MetroPCS on April 30, 2013. The company offers national wireless voice and data services to consumers and businesses in the U.S, and simple no-contract service plans.
CEO John Legere has been with T-Mobile for over six years, becoming president and chief executive in September 2012. His most recent experience was with telecom network provider Global Crossing. He was named CEO of Global Crossing just months before that company went into bankruptcy in January 2002 and remained on as CEO through the sale of the company to Level 3 Communications in October 2011.
Deutsche Telekom effectively controls T-Mobile with a 65% ownership interest, and DT's interests may diverge from those of minority shareholders. While it has pledged to remain involved in TMO, this could always change and even the perception that DT is pulling out could impact TMUS shares. Management could also become distracted by negotiations around the Sprint merger. TMO continues to have a substantial debt burden. This could slow needed capital investments in its network, as well as future spectrum purchases or other acquisition opportunities.
TMO competes directly with services offered by the major national carriers, AT&T, Verizon and Sprint. AT&T and Verizon are larger and can draw on many more resources than TMO. The large carriers can also offer bundles of services, including wireless, landlines, high-speed internet, and, increasingly, video, which customers may prefer to a stand-alone wireless service.
The company's results are seasonal, with the first and fourth quarters strong and the second and third quarters weaker. The seasonal decline in subscriber acquisitions and concomitant softer revenue growth at midyear may mislead investors into misinterpreting the company's results and share price volatility.
TMO's unlimited service business model and low-cost operating structure is oriented to appeal to price-sensitive consumers. Some might call this the lower-tier or 'subprime' end of the market - the same consumers who have been hit hardest by a weak economy. In the company's favor is its 'Un-carrier' marketing campaign, competitive pricing and the high value that consumers put on having a wireless telecommunications link.
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