T-Mobile Raises $2.94 Billion To Fund Stock Buybacks, Dividends, and Debt Refinancing

On Wednesday, T-Mobile US, Inc TMUS disclosed plans to raise 2.75 billion euros ($2.94 billion) by selling 3.150% Senior Notes due 2032, 3.500% Senior Notes due 2037, and 3.800% Senior Notes due 2045 under a secondary public offering.

T-Mobile USA looks to utilize the offering proceeds for general corporate purposes, including share repurchases, dividends, and refinancing of existing indebtedness.

Last week, T-Mobile US reported fourth-quarter revenue of $21.87 billion (versus $20.48 billion Y/Y), topping the analyst estimate of $21.31 billion.

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Earnings of $2.57 per share surpassed the consensus estimate of $2.26. However, T-Mobile US’ adjusted free Cash flow of $4.1 billion declined by 5%.

After the quarterly print, at least nine Wall Street firms, including Wells Fargo, Scotiabank, JP Morgan, Benchmark, RBC Capital, BofA Securities, Oppenheimer, and Barclays, raised their price forecast on T-Mobile US.

Scotiabank’s Maher Yaghi expects continued service revenue growth in fiscal 2025, helping generate $17 billion—$17.6 billion in free cash flow. This is backed by growth potential in the suburban, rural, and enterprise mobile segments and additional market share gains in broadband.

Last December, KeyBanc analyst Brandon Nispel downgraded T-Mobile US’s rating, citing the company’s acquisitions in the Fiber business at significant multiples that have yet to be proven.

The S&P Telecom Select Industry Index gained 41% in the last 12 months, topping the S&P 500’s over 22% gain.

Telecom companies are known for their cash flow generation, which goes towards paying dividends and buybacks, driving ROE. T-Mobile US currently pays a quarterly dividend of $3.52 per year for a yield of 1.48%.

Comcast Corp CMCSA raised its dividend by 6.5% Y/Y to $1.32 per share annually and approved a new share repurchase program of $15 billion. AT&T T plans to return $20 billion in dividends and $20 billion in repurchases from 2025-2027.

T-Mobile’s US stock surged over 46% in the last 12 months. Investors can gain exposure to the stock via the iShares Core S&P 500 ETF IVV and the Vanguard Growth ETF VUG.

Price Action: TMUS stock traded higher by 0.23% to $237.80 premarket at the last check on Wednesday.

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