Issue link: https://maltatoday.uberflip.com/i/1425443
4.11.2021 7 INTERNATIONAL MARKETS T-MOBILE US put recent investor fears to rest with its third-quarter re- sults on Tuesday evening. e com- pany fell short on revenue, but beat subscriber and earnings forecasts, and raised guidance for the remainder of 2021. Many analysts had been cautious going into T-Mobile's third-quarter report, given the potential for strong showings by rivals and a consumer-da- ta hack to weigh on the magenta-hued wireless company's momentum. It didn't turn out that way. e results were good enough to send T-Mobile stock (ticker: TMUS) soaring 6% in Wednesday morning trading, to around $123. T-Mobile reported 55 cents in earn- ings per share for the third quarter, ahead of analysts' average estimate of 48 cents but, down from $1.00 in the same period a year ago. Management said that costs related to the merger with Sprint subtracted 56 cents per share from earnings in the period. Revenue in the period was $19.6 billion, up 2%, versus the Wall Street consensus of $20.2 billion. T-Mobile's third-quarter adjusted Ebitda—short for earnings before interest, taxes, de- preciation, and amortization—came in at $6.8 billion, matching estimates. Net income was almost $100 million bet- ter than expected at $691 million. e company also generated $1.6 billion in free cash flow, as expected. e financial results are hard to se- riously criticize, but T-Mobile had set the bar high for itself. e company was coming off a pair of beat-and-raise quarters, and tends to do better than Wall Street's numbers across the board each period it reports. As-expected re- sults are actually a relatively weak show- ing for this perpetual outperformer. But investors seemed to be expecting a much worse result. T-Mobile shares had declined 20% from July 1 through Tuesday's close, while the S&P 500 had returned 7%. On the subscriber front, T-Mobile narrowly beat AT&T 's (T) third-quar- ter net additions for wireless postpaid customers—meaning those who pay a monthly bill—but lagged behind its big blue rival in postpaid phones, which are seen as the most valuable. T-Mobile said Tuesday that it added a net 1.3 million postpaid subscribers in the third quarter, topping the aver- age call on Wall Street for 1.2 million. Some 673,000 of those were postpaid phones, versus the consensus call of 645,000. AT&T added a net 1.2 mil- lion postpaid subscribers last quarter, including 928,000 postpaid phones. Verizon Communications (VZ), mean- while, said last month that it added a net 699,000 postpaid subscribers in- cluding 429,000 postpaid phones in the third quarter. T-Mobile's subscriber growth beat a lowered bar from Wall Street. e average estimate of postpaid net adds came down from more than 1.5 million since the start of September, while the postpaid phones net add target stood at 750,000 two months ago. In August, T-Mobile was hit by a cyberattack that exposed customer information includ- ing social-security numbers, address- es, and driver's license information. T-Mobile said it had worked to quickly secure its systems and had offered cus- tomers an identity-theft monitoring service, but CEO Mike Sievert warned in September that the episode had af- fected T-Mobile's business for some of the third quarter. T-Mobile management lifted the bot- tom end of their 2021 postpaid sub- scriber growth target, to a current range of 5.1 million to 5.3 million net addi- tions, versus between 5.0 million to 5.3 million a quarter ago. e company also now expects to realize merger-related cost savings faster than expected, and deliver $5.5 billion to $5.6 billion in free cash flow this year, from prior guidance of $5.2 billion to $5.5 billion. Management also lifted their guid- ance for 2021 "core adjusted Ebitda," which further excludes lease revenues from adjusted Ebitda, which already leaves out stock-based compensation, merger-related costs, Covid-19-related costs, and other noncash or nonrecur- ring expenses. T-Mobile now has a tar- get of $23.4 billion to $23.5 billion in core adjusted Ebitda this year, up from $23.0 billion to $23.3 billion. Zooming out beyond just the third quarter, T-Mobile's momentum re- mains unmatched in the U.S. wire- less industry. Last year's acquisition of Sprint gave the combined compa- ny greater scale, wireless spectrum, and network assets, and has helped it to continue to win market share—on top of lower prices than Verizon and AT&T. Cost-savings benefits from the merger are showing up in T-Mobile's bottom line as the lengthy integration process proceeds. Rising free cash flow will open the door to tens of billions of dollars of share repurchases in the coming years. e 20% discount to T-Mobile stock since the summer has made the shares all the more interesting. Almost 90% of Wall Street analysts have a Buy or equivalent rating on the stock, with an average price target of $169—some 45% above current levels. T-Mobile silences doubters with its earnings report Pound will slump if Bank of England doesn't hike, HSBC says WITH market expectations the Bank of England will hike interest rates as early as ursday, strategists at HSBC said there are three outcomes for ster- ling, with more downside than upside. e pound GBPUSD, 0.37% traded at $1.3642, up from $1.3613 on Tuesday. Strategists led by Dominic Bunning, head of European FX research, say the most hawkish outcome would be a 15 basis point hike — what markets ex- pect — and a Bank of England inflation report "affirming" the market expecta- tions of another 85 basis points of in- creased by the middle of next year. "If the BoE's inflation report effec- tively supports this profile, by keeping inflation projections elevated despite the tighter policy implied by forward rates, this would support GBP initially. We saw similar outcomes in Norway and New Zealand, where affirmation of tighter policy was positive for local currencies," they said. Even in that sce- nario, upside would be limited to re- cent highs around $1.3850. Another possibility would be a hike but a pushback against the speed of hikes over the next few months. at would be like what happened in Aus- tralia, where yield curve control was ended but the central bank didn't antic- ipate rates hikes until 2024. A third possibility is no rate hike at all and a pushback on market pricing of future rate hikes. e FTSE 100 UKX, -0.43% slipped 0.5% in afternoon trade, weighed down by weakness from oil majors BP BP, -2.97% and Royal Dutch Shell RDSB, -1.76%.