Quick Hits

Slidecast: New T-Mobile: A Detailed Look at the Non-disruptive Business Case

TMUS: Legere Steps Down; Carter Stays Longer; No Change To Thesis

T-Mobile announced that John Legere is stepping down as CEO on April 30th, 2020 and Braxton Carter is extending his contract until July 1st, 2020.  The announcement of the transition is no surprise; Sievert has been the heir apparent for some time; however, the timing is a little surprising.  The company attributes the timing to removing an uncertainty around the continuity of leadership and of the Un-carrier strategy ahead of the trial.  This strikes us as plausible.

For our part, we expect T-Mobile’s current path to continue under Sievert; we suspect he has played a strong role in shaping T-Mobile’s strategy for years.  We doubt the management change will materially impact the prospects for the case at trial.  As such, the announcement has no impact on our thesis.

Blair Levin, our partner on regulation and policy, has given the deal less than 50% odd of approval for some time (see most recent comment HERE).  We think the deal ought to go through (see thoughts HERE), but we understand why it may not.  We are comfortable owning T-Mobile’s stock either way.

We continue to see an opportunity for tremendous value creation if T-Mobile acquires Sprint (it is more than just synergies; see our evolving thoughts on the value of capacity and unit costs HERE on slide 6).  The opportunities for the company may not be quite as good without Sprint; however, we see upside in that scenario too.

New T-Mobile Un-Carrier 1.0: Helps The Public Interest Argument, But Not the Clayton Act Defense

Yesterday, T-Mobile announced various “Un-Carrier” moves that the company would undertake if the merger with Sprint is allowed to close.  In aggregate, the moves are unlikely to materially affect either pro forma T-Mobile’s financial results or the odds of the deal closing, but given the low cost of offering these plans, we view it as a marginal positive.  In this brief note, we run through the various offerings, and their impact (or lack thereof) on wireless and broadband markets and the state AG litigation.

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DT’s New Guidance Positive For US C-Band Auction Proceeds

What’s new: This morning, DT issued dividend guidance that was well below expectations, saving the company nearly ~$1BN in annual dividend commitments, noting that there was “greater clarity with respect to several spectrum auctions coming up in the US”.  In addition, the company’s re-iterated leverage target suggests ~$10-20BN in capacity at T-Mobile for upcoming auctions. We believe this commentary is supportive of our thesis that a C-Band auction will raise $50BN (LINK), and positive for Intelsat and the other C-Band Alliance members.

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Equinix Management Meeting Takeaways

We met with Charles Meyers (CEO) and Keith Taylor (CFO) at EQIX’s headquarters following Q3 earnings last week.  We gained a ton of insight into the drivers of higher organic growth, the impact the DLR/INXN deal may have on EQIX, the path to margin expansion, and future M&A.  We came away thinking EQIX is poised to accelerate growth and outperform expectations in 2020.

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AT&T: New Pricing Supportive Of Subscriber-Led Improvement At Wireless

What’s New: AT&T has announced new wireless Unlimited pricing that lowers the price of entry-level Unlimited; this should be help subscriber trends in the coming quarters across both churn and gross adds.  Overall, we think the move is supportive of our bullish view on AT&T’s wireless business, which should see sustainable churn declines driven by the company’s deployment of 60MHz of greenfield capacity (for a detailed look at our churn thesis see HERE).

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Another Block Of Spectrum Is One Step Closer To Coming to Market

What’s New: The FCC has reportedly sent an Order on Ligado’s license modification application to NTIA for review by the Interdepartment Radio Advisory Committee (IRAC).  This is a positive sign for the company; the FCC is advancing the process, at last.  It is still unclear how (or if) NTIA / IRAC will respond to the FCC proposal; however, if the FCC is able to adopt the Ligado application, it would release 30MHz of L-Band spectrum for terrestrial wireless use.  After a decade of being sidelined due to complaints from the GPS community, the industry would no doubt welcome seeing this spectrum repurposed.  Moreover, it could be released for terrestrial use at an interesting time; Ligado has been testing use cases in which the spectrum is paired with higher frequency bands to improve their propagation (see our Intelsat initiation HERE for our detailed thoughts on the value of C-Band).

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New C-Band Alliance Plan For 300MHz Positive For Intelsat

What’s New:  The C-Band Alliance released a new plan to re-allocate 300MHz of the C-Band for terrestrial use (LINK).  Other aspects of the CBA proposal, such as auction structure, were largely left unchanged, and we expect further filings to address some of the technical details around the transition.  The new plan for 300MHz is a positive step for the CBA as it further solidifies its position at the FCC by making a “significant amount” of spectrum available (one of FCC Chairman Ajit Pai’s four principles as detailed HERE).  We remain buyers of Intelsat on the deeply under-valued C-Band opportunity (as laid out HERE).

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DISH: One Step Closer

Yesterday, DISH announced the release of an RFP regarding network planning, and more explicitly laid out the timeline for the 5G network launch (LINK). This comes after two other RFPs issued earlier this year that addressed the core network (LINK), and project management for the deployment. In this brief note, we lay out the next steps for the DISH’s network business, which we think will ultimately be worth $100BN (see our deep-dive report HERE).

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