T-Mobile Stock Market Value Has Been Rising. It’s Bigger Than Verizon.

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Illustration by Elias Stein

There’s a new top dog in U.S. telecom. This past Tuesday, T-Mobile US nosed ahead of Verizon Communications , and AT&T in market capitalization—an exclamation point for the once-upstart wireless company. As of that day’s close, T-Mobile’s stock market value stood at $178 billion, versus Verizon’s $173 billion and AT&T’s $120 billion. T-Mobile stock finished the day at $141.91, with a year-to-date gain to 22%. Verizon stock has lost 18% after dividends; AT&T, 5%, and the S&P 500, 17%.

After a 0.5% decline Tuesday, to $41.10, Verizon was at its lowest since June 1, 2012. The shares had returned 59% since then, thanks to dividends, versus the S&P 500’s 275% and T-Mobile’s 1,611%. AT&T stock has returned 18% over that period.

T-Mobile’s top market cap is as much a function of its rise as Verizon’s decline. Since the Sprint deal closed in 2020, T-Mobile has grabbed the 5G lead. As the costly integration of Sprint nears a close, investors have piled into the stock. On Thursday, T-Mobile unveiled the first phase of a share buyback program that could retire nearly two-thirds of the stock’s free float, boosting earnings per share. On average, analysts see T-Mobile earnings growing from $2.41 per share in 2021 to $11.54 in 2025. They expect Verizon and AT&T EPS to be flat over that period.

Market value reflects the equity in the capital structure. Verizon and AT&T both have significant debt. By enterprise value (equity plus debt, minus cash and equivalents), both remain more valuable than T-Mobile. Verizon’s EV was $320 billion at Tuesday’s close, versus AT&T’s $275 billion, and T-Mobile’s $247 billion.

Last Week

Snapback Rally

With Labor Day over, the S&P 500 fell for a seventh straight session, its longest slump since November 2016. Industrial metals and oil slid on signs of slowdowns in Europe and China, the dollar strengthened, and rate fears rose, bolstered by a strong August service industry survey. Stocks rallied, despite central-bank gloom, snapping a three-week losing streak. On the week, the Dow Jones Industrial Average was up 2.66%, to 32,151.71; the S&P 500 rose 3.65%, to 4067.36; and the Nasdaq Composite soared 4.14%, to 12112.31.

Hawks in Harmony

Federal Reserve officials surfaced in mass, talking tough on inflation, and Goldman Sachs predicted a 75 basis point raise at the coming rate-setting meeting. The European Central Bank took rates from 0% to 0.75%, its biggest hike ever.

Europe’s Energy War

Russia finally dropped the pretense, closing the Nord Stream 1 pipeline until Western sanctions are dropped. The European Commission sought natural gas price caps, and the G-7 discussed price caps on Russian oil. OPEC+ announced a small production cut, Finland, Sweden, and Switzerland agreed to provide funds to support utilities in a liquidity crunch, and the EC urged windfall taxes on energy producers to defray consumer costs. Russian shelling shut Zaporizhzhia, the big Ukraine nuclear plant, as Ukrainian troops took back territory in the north.

The U.K. in Transition

Boris Johnson resigned as the United Kingdom’s prime minister, and Liz Truss, 47, was sworn in by Queen Elizabeth II in Scotland. Truss, facing a cost of living crisis with energy prices skyrocketing, inflation soaring, and the pound weakening to levels last seen in 1985, proposed a $172 billion energy relief bill. On Thursday, the queen, 96, died after 70 years on the throne. Her eldest son, the Prince of Wales, 73, became King Charles III.

Nature Strikes

An earthquake hit Afghanistan and another struck China, still struggling with Covid outbreaks. A typhoon battered Korea, while flooded Pakistan struggled to keep its largest lake from overflowing. California, hit by record heat and wildfires, urged power conservation to avoid outages.

Annals of Deal Making

CVS Health won the auction for Signify Health , with an $8 billion bid, beating Amazon.com and UnitedHealthVolkswagen said it would seek an initial public offering for Porsche in late September or early October. Porsche could be valued at some $85 billion…The European Commission moved to block Illumina ’s acquisition of cancer screener Grail a week after the company had rebuffed an FTC attempt to kill the deal. Illumina said it would appeal the EC decision…Movie theater chain Cineworld filed for Chapter 11 with $5 billion in debt…An appeals court said Citigroup could claw back $504 million it mistakenly sent to Revlon lenders.

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com