Does T-Mobile (NASDAQ: TMUS) make money?
Many investors will wonder if T-Mobile (NASDAQ: TMUS) is making money because of its growth.
The number of T-Mobile US subscribers grew from 66.71 million in the first quarter of 2020 to 103.44 million in first quarter of 2021, Statista estimates. Thus, I calculate T-Mobile’s American subscriber base grew by 36.73 million customers in a year.
Conversely, T-Mobile’s US subscriber base fell from 86.05 million in fourth quarter of 2019 to 66.71 million in the first quarter of 2020. Statista attributes that fall to a change in T-Mobile’s subscriber policies. Notably, T-Mobile’s US subscriber base grew from 86.05 million in fourth quarter 2019 to 102.06 million in fourth quarter 2020.
Is T-Mobile a Tremendous Value Investment?
Thus, T-Mobile (TMUS) is capable of tremendous growth. Moreover, most of those subscribers pay T-Mobile $60 to $85 a month for their phones.
Since a phone is vital to life in modern America. Most of those people will pay that $60 to $85 even if they have to scrimp on the grocery bill or delay the rent.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/pexels-ketut-subiyanto-4350227.jpg?resize=800%2C533&ssl=1)
Consequently, T-Mobile could be a tremendous value investment because it could generate enormous amounts of float. The float is a constant stream of subscription or premium revenue a company can tap for any purpose.
For example, T-Mobile can use the subscription float to expand its 5G network or pay of debt. In addition, T-Mobile can borrow against the float to pay for acquisitions.
How Much Cash Does T-Mobile Generate?
Fortunately, we can put this theory to the test by examining T-Mobile’s cash flow. I think T-Mobile’s cash flow numbers prove this theory.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/alonso-reyes-3vxTnz3seKE-unsplash.jpg?resize=640%2C427&ssl=1)
For example, T-Mobile (NASDAQ: TMUS) reported a quarterly operating cash flow of $5.03 billion on 31 March 2021. The quarterly operating cash flow grew from $2.342 billion on 31 March 2020.
In addition, T-Mobile reported quarterly ending cash flow of $6.759 billion on 31 March 2021. The quarterly ending cash flow grew from $1.112 billion on 31 March 2020.
How Much Debt does T-Mobile Accumulate?
On the other hand, T-Mobile (TMUS) got a lot of that cash by borrowing. Notably T-Mobile reported quarterly financing cash flows of $2.505 billion on 31 March 2021 and $3.227 billion on 31 December 2020.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/cell-tower-5390644_1280.jpg?resize=800%2C533&ssl=1)
The quarterly financing cash flow fell from $14.551 billion on 31 June 2020. T-Mobile also pays off enormous amounts of debt. It reported a quarterly financing cash flow of -$7.289 billion on 30 September 2020.
Dramatically, T-Mobile’s Total Debt grew from $42.021 billion on 31 March 2021 to $110.942 billion on 31 March 2021. Thus, they built T-Mobile’s massive 5G network with debt.
How Much Money Does T-Mobile (TMUS) Make?
T-Mobile (TMUS) makes enormous amounts of money from that network. For instance, T-Mobile reported quarterly revenues of $19.759 billion on 31 March 2021. The quarterly revenues grew from $11.113 billion on 31 March 2020.
Similarly, T-Mobile reported a quarterly gross profit of $7.097 billion on 31 March 2021. The quarterly gross profit grew from $5.227 billion on $31 March 2020.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/pexels-anna-shvets-5262905.jpg?resize=800%2C533&ssl=1)
However, T-Mobile reported a quarterly operating income of just $2.139 billion on 31 March 2021. The quarterly operating income grew from $1.539 billion on 31 March 2020.
Consequently, T-Mobile had $6.677 billion in cash and short-term investments on 31 March 2021. The cash and short-term investments rose from $1.112 billion on 31 March 2020.
T-Mobile is Capable of Enormous Growth
T-Mobile (NASDAQ: TMUS) experienced enormous growth during the pandemic.
In particular, the Total Assets grew from $87.226 billion on 31 March 2020 to $203.332 billion on 31 March 2021. Thus, T-Mobile’s moneymaking capacity grew dramatically during the COVID-19 pandemic.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/pexels-andrea-piacquadio-783243.jpg?resize=800%2C533&ssl=1)
Notably, Stockrow estimates that T-Mobile’s revenues grew by 79.8% in the quarter ending on 31 March 2021. In contrast, T-Mobile’s revenue grew by 0.3% in the quarter that ended on 31 March 2020.
Mr. Market has noticed that growth. T-Mobile’s share price grew from $104.15 on 30 June 2020 to $144.88 on 31 June 2021. Plus, T-Mobile had a $180.6 billion Market Cap on 30 June 2021. Thus, I consider T-Mobile an attractive growth stock with a decent margin of safety.
What Value Does T-Mobile Have?
I think T-Mobile’s value comes from its massive subscriber base and its enormous coverage map.
The coverage map at T-Mobile’s website claims the company’s 4G and 5G network covers most of the mainland United States. For example, T-Mobile claims to cover all of North Dakota and Nebraska, almost all of Minnesota and Michigan, and most of my home state of Colorado.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/pexels-anna-shvets-3987034.jpg?resize=800%2C533&ssl=1)
However, the map shows there is no T-Mobile coverage in many mountainous areas including much of Idaho and Nevada. In addition, T-Mobile service is unavailable in large areas of California and Northern Mexico.
T-Mobile’s embrace of 5G is impressive
T-Mobile’s embrace of 5G is impressive. The company claims that all of its plans include 5G. To elaborate, 5G is fifth generation wireless network technology that can more data. T-Mobile claims 5-G is faster and more flexible than 4G LTE. Unfortunately, T-Mobile’s website does not say how much of North America its 5G Network covers.
![](https://i0.wp.com/marketmadhouse.com/wp-content/uploads/2021/07/pexels-andrea-piacquadio-3769022.jpg?resize=800%2C531&ssl=1)
I think the growth justifies the $146.29 Mr. Market paid for T-Mobile US (TMUS) on 2 July 2021. However, I cannot tell if the growth is sustainable.
If you are seeking a growth stock that could become a strong value investment, T-Mobile is worth a look.