Scotiabank analysts reiterated a Sector Outperform rating and $185.00 price target on T-Mobile US, (NASDAQ:).
The analysts commented, “T-Mobile announced this morning that it will be acquiring almost all of UScellular for $4.4B in a combination of cash and debt. While the transaction is small from TMUS’ point of view, we believe it is a win-win for both the company and consumers. From a network perspective this should provide additional capabilities for TMUS to expand presence in rural areas which it is currently under penetrated in as well as provide the company with attractive spectrum to improve service and coverage. Given the company’s past success in delivering on the Sprint synergies, we believe investors will begin to include upside from the deal when more disclosure is provided by UScellular regarding the divested asset’s profitability. While we believe the acquired assets lacked scale and likely lagged on profitability metrics, the potential accretion within TMUS’ portfolio should be much easier to attain and we see the transaction as accretive.”
