T-Mobile Hints At The Possibility Of A Dividend If M&A Doesn't Manifest

UBS analyst John Hodulik maintains his Buy rating on shares of T-Mobile US Inc TMUS and $80 price target following strong second-quarter earnings results.

The company posted $10.2 billion in sales, significantly beating the Street’s estimated $9.81 billion. EPS came in a $0.67.

Management also upped guidance for 2017 adjusted EBITDA and postpaid customer gains.

Shares opened Thursday up 3.1 percent immediately began working down to below Wednesday’s close, a surprise for many investors reacting to bullish analyst commentary.

Growth, One Way Or Another

Investors may be disappointed by the lack of news on the M&A front during the earnings call.

T-Mobile has been put on the sidelines by Sprint Corp S, which has entered exclusive negotiations with Comcast Corporation CMCSA and Charter Communications, Inc. CHTR about a potential wireless service partnership.

Hodulik isn’t concerned though, saying he got the impression T-Mobile is seeking to restart talks with Sprint when the exclusive negotiations close later this month.

While a merger with Sprint would likely provide the greatest possible value-creation, “management sees a number of strategic options available to it,” according to Hodulik.

Something that ought to get investors excited though, is the potential for T-Mobile to begin paying out dividends.

Management indicated that it would only do so if consolidation proved to be impossible.

AT&T Inc. T and Verizon Communications Inc. VZ have both paid dividends for decades.

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