September 19, 2024 06:50 GMT
COMMUNICATIONS: T-Mobile CMD In Line With Consensus; Flexible Allocation Policy
COMMUNICATIONS
NR/BBB/BBB+
TMUS 2027 targets released at the CMD yesterday are relatively near-term and look broadly in line with consensus so don’t seem likely to move spreads much while the planned capital allocations leave them a large degree of flexibility with certain funds uncommitted between investments, payouts and delevering. USD lines were mixed and muted yesterday with most lines up to 2bp tighter.
- 2027 targets: Service revenue of USD 75-76bn (FY23: USD 63.3bn, BBG consesnsus: USD 75.3bn), Core Adjusted EBITDA of USD 38-39bn (FY23: USD 29bn, BBG consensus of USD 27.8bn), and Adjusted Free Cash Flow of USD 18-19bn (USD 14bn, BBG consensus of USD 18.8bn).
- Broadband growth: 12mn 5G customers by 2028 (from 7-8mn target for 2025, think this is at in line with upper end of forecasts); fibre partnerships to reach 12-15mn households by 2030..
- Capital allocation: USD 9-10bn expected in annual capex (BBG consensus: USD 9bn in FY24 rising to just over USD 10bn in FY28), leverage target unchanged at 2.5x, USD 80bn plan for investments and returns by 2027, including up to USD 50bn in stockholder returns, approx. USD 10bn on announced acquisitions and USD 20bn to be retained as flexibility for investments, delivering or additional payouts.
- Next dividend increased to USD 0.88/share, +35% QoQ.
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