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Can T-Mobile Hold Its Position as a Nasdaq Top Performer? Jeff Kagan

With 5G, other industries are seizing the moment to use wireless to transform their spaces as well.
Equities columnist Jeff Kagan is a telecom, technology and wireless analyst and consultant. He covers 5G, AI, IoT, the metaverse, autonomous driving, healthcare, telehealth, pay TV and more. Follow him at JeffKagan.com and on Twitter @jeffkagan and LinkedIn.
Equities columnist Jeff Kagan is a telecom, technology and wireless analyst and consultant. He covers 5G, AI, IoT, the metaverse, autonomous driving, healthcare, telehealth, pay TV and more. Follow him at JeffKagan.com and on Twitter @jeffkagan and LinkedIn.

T-Mobile US (TMUS - $143.81 0.82 (0.573%)  ) is surprising investors and wireless industry watchers with its continued solid performance. In a tough stock market, one that has roughed up pretty much all wireless competitors, the company remains a leader  — one of Nasdaq’s 100 best performers this year. The question is, how long can T-Mobile continue in this vein, and can competitors like AT&T Mobility (T - $19.16 0.09 (0.468%)  ) and Verizon Wireless (VZ - $40.52 0.03 (0.074%)  ) follow, improving their position and performance as well.

To better understand the sources of T-Mobile’s winning streak, we must pull the camera back and take a longer-term perspective of the company, its competition and in fact the entire wireless industry.

Years ago, T-Mobile was failing. The company even missed the industry’s move from 2G to 3G — not recognizing its urgency. At that point, the leaders were AT&T and Verizon. Sprint was third and doing the best with what it had. T-Mobile was withering on the vine.

In 2012, T-Mobile hired a new CEO who single-handedly transformed the company into a winner. John Legere brought in many executives he’d worked with in the past, at places like AT&T and Dell Computer. Success did not happen overnight, of course, but in 2020, T-Mobile acquired Sprint, and the rest is history.

Legere’s strategy worked, demonstrating the value of visionary leadership. John Legere then passed the reins onto Mike Sievert, who has since been doing a great job writing the second act of the T-Mobile story.

Cross-Industry Synergy

The wireless industry did not stand still in the meantime. Today, while Verizon, T-Mobile and AT&T are still the leaders, speeds have increased dramatically and the focus is now on the transition from 4G to 5G.

But this time there’s an important difference: The increase in speed brings with it an entirely new growth opportunity. With 5G, other industries are stepping in to seize the potential to use wireless to transform their spaces as well. This represents incredible growth — if the carriers can leverage it.

In addition, the prepaid wireless market continues to expand. Originally a product for users with bad credit, prepaid today is growing fast for every user. In fact, the prices are dramatically lower than traditional post-paid wireless.

Sure, users do not get all the bells and whistles with prepaid that they get with post-paid. But many don’t use them anyway, so the gap isn’t critical.

The prepaid field is full of competitors, including Xfinity Mobile (CMCSA - $38.76 0.91 (2.294%)  ), Spectrum Mobile (CHTR - $403.30 0.69 (0.171%)  ) and Altice (ATUS - $4.69 0.13 (2.697%)  ) / Optimum. There are also many smaller providers like Pure Talk, Tracfone and more. But even as the marketplace grows increasingly competitive, T-Mobile continues to expand.

Price is another reason for T-Mobile’s success. During the pandemic, T-Mobile did not increase its prices to the degree Verizon Wireless and AT&T Mobility did. This gives the value-conscious user more reason to switch, while keeping a relationship one of the big three.

Today, T-Mobile is in a leadership position. That’s a completely different story from a decade ago. But the field is more crowded and offerings more diverse.

The wireless industry remains one of the most powerful growth engines we have ever seen but the growth opportunity for T-Mobile is more than just wireless. AI, IoT, cloud and so much more represent the future of the wireless industry… not only for T-Mobile, but for every wireless competitor, and in fact for every other company in every other industry. This is what T-Mobile needs to be focused on for long-term growth.

Jeff Kagan, a telecom, technology and wireless industry analyst and consultant, is an Equities.com columnist. He covers 5G, AI, IoT, the metaverse, autonomous driving, healthcare, telehealth, pay TV and more. Follow him at JeffKagan.com, and on Twitter @jeffkagan and LinkedIn.