T-Mobile Us Inc (NASDAQ:TMUS) recently published its quarterly earnings for 4Q2020, revealing that it managed to shatter Wall Street expectations partly thanks to synergies from its merger with Sprint.
The carrier generated $20.3 billion revenue in during the three month-period ended December 31, equivalent to 60 cents per share earnings. Wall Street analysts set the consensus revenue target for T-mobile at $19.9 billion or 51 cents per share. The company attributes the impressive performance to numerous factors, including continued user growth.
It was during the same quarterly period that the company announced that it surpassed 100 million users on its network. The company gained an additional 1.7 million users in 4Q2020, bringing the total subscriber count to 102.1 million. The company also reported that the synergies from its merger with Sprint generated $1.3 billion in revenue. The company has so far migrated 4 million customers from the Sprint network, which will be shut down as soon as the migration is complete.
T-Mobile’s rapidly expanding 5G coverage
Although the merger provided a notable boost to T-mobile’s growth during the quarter, the company is already trying to secure strong future growth through heavy investment in 5G infrastructure. T-mobile previously announced that it secured partnerships with Nokia Oyj (NYSE:NOK) and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) as part of its plan to expand its 5G infrastructure and coverage.
The network expansion is part of T-mobile’s strategy for leveraging more growth in the future. The carrier with the faster and reliable 5G network will be highly attractive to customers and this will translate to more demand for its services. Focusing on network coverage therefore looks like a good plan for the company. However, the technology might eat into the overall profitability in the first few years, and it is something that investors should consider.
As far as performance in the next quarter is concerned, the prevailing consensus estimate is that the company will report $18.87 billion revenue or $0.62 per share earnings in the next quarterly earnings report. The consensus estimate for the full fiscal year is $78.46 billion or $3.23 per share.