Buffett's Choice: T-Mobile's Growth and Competitive Edge

Buffett's Choice: T-Mobile's Growth and Competitive Edge. T-Mobile's performance outshines competitors AT&T and Verizon with significant customer gains and improved cash flow, making it a compelling investment in Berkshire Hathaway's portfolio.

Date: 16-03-2025

AI Rating: 7

Investment Overview: The report highlights Warren Buffett's investment in T-Mobile as the only telecom stock remaining in Berkshire Hathaway's portfolio. T-Mobile has shown market-beating gains, outpacing competitors like AT&T and Verizon.

Financial Performance: Key metrics include:

Revenue Growth: T-Mobile reported $81 billion in revenue for 2024, a 4% increase from the previous year.
Free Cash Flow (FCF): The company achieved adjusted free cash flow of $17 billion, reflecting a remarkable 25% year-over-year growth.
Net Cash from Operating Activities: The company reported $22 billion in net cash provided by operating activities, which represents a 20% increase from year-ago levels.

Competitive Advantage: T-Mobile's competitive edge comes from its focus solely on wireless services since its establishment in 1994, allowing it to eliminate legacy costs. Its acquisition of Sprint enhanced its service offerings and spectrum control, leading to improved network quality.

Future Projections: T-Mobile anticipates continuous growth with postpaid net customer additions of between 5.5 million and 6 million set for 2025. Net cash from operating activities is expected to rise to between $26.8 billion and $27.5 billion, a 24% increase at the midpoint.

Valuation: While T-Mobile's P/E ratio stands at 27, higher than its competitors, the company's strong cash flow growth may make it attractive to investors.

Stocks: TMUS T VZ