Ask Your Advisor: Why should I consider T-Mobile in my portfolio?

For investors prioritizing safety and predictable returns, stable assets from top-notch companies are important.

One client asked about one of our top bond picks, T-Mobile USA. We said the company is now the dominant company behind America’s always-on connectivity. For those who want a reliable income stream while gaining exposure to the growth of 5G, we believe T-Mobile can provide the stability.

If you are a client with an aggressive risk profile and a Qualified Individual Buyer (QIB) with Metrobank, we explain in this article how adding T-Mobile’s highly rated corporate bonds can be a strategic move.

T-Mobile USA, Inc. is a BBB+ rated company and a leading US telecommunications provider, offering wireless voice, messaging, and data services, along with a wide range of devices and accessories. With a commanding 33% market share, T-Mobile leads the US wireless oligopoly, ahead of the other players such as Verizon and AT&T. The company’s superior spectrum resources enable the fastest and most extensive 5G coverage nationwide, positioning it as a frontrunner in next-generation connectivity.

1. Continuous sustained growth T-Mobile has consistently maintained an annual Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) growth of approximately 5.8% from 2021 to 2024, reflecting its strong financial performance. Utilizing the best airwave resources among competitors, the company delivers faster and broader 5G coverage, reinforcing its leadership in network quality. Looking ahead, T-Mobile is targeting year-on-year service revenue growth of at least 6%, underscoring its commitment to sustained expansion and market competitiveness. 
2. Healthy debt levels T-Mobile’s strong free cash flow provides the company with significant liquidity to pursue selective mergers and acquisitions, reinforcing its strategic growth opportunities. Additionally, the company boasts the strongest free cash flow-to-debt ratio among its peers, emphasizing its superior financial health and ability to manage its debts effectively. 
3. Strategic risk resilience T-Mobile demonstrates strong strategic positioning through its leadership in 5G deployment and strong influence in rural markets. At the same time, the company mitigates risks effectively by implementing proactive compliance measures, strengthening cybersecurity, and achieving cost efficiencies through mergers, ensuring resilience against competitive and regulatory pressures.

Given the potential for a steeper yield curve amid heightened inflationary risks in the US, we see value in T-Mobile’s 5-year tenor bonds, such as the TMUS 2.55% 2031 issue, which offers competitive spreads and liquidity, making it a strategic defensive play for diversification. Since T-Mobile bonds are dollar-denominated corporate bonds, you must be: 1) a sophisticated investor with an aggressive risk profile, and 2) have QIB status with Metrobank to be able to buy the said bonds. You may reach out to your relationship manager or investment specialist for more info.

MARIA CHRISTINA “YNA” VIRTUDAZO is an Investment Counselor at Metrobank’s Institutional Investors Coverage Division. Her work involves analyzing High Net Worth clients’ portfolios and providing actionable insights and recommendations to better enhance their portfolios’ overall returns. She is a licensed Fixed Income Market Salesperson of the Securities and Exchange Commission and a certified Unit Investment Trust Fund (UITF) salesperson. She graduated with a bachelor’s degree in business administration from the University of the Philippines – Diliman. She spends her free time listening to K-pop, writing fanfiction, and watching Netflix series and K-dramas.