Yahoo Finance T-Mobile CEO on Sprint deal: We had 2 years to plan, now we are able to move faster
New T-Mobile CEO Mike Sievert is in the captain’s chair at perhaps the most pivotal time in the telecom company’s history.
Not only is Sievert tasked with navigating the giant unknown that is being a large public company amidst a global health crisis, but he will be navigating it as a captain of a bigger ship post the merger with Sprint (which finally closed on April 1). Oh, and then there is that nationwide 5G rollout the company is executing.
Sievert — sitting down in an interview with Yahoo Finance back in his HQ office for the first time since March —is confident in the road ahead. And most importantly for investors, confident he and his executive team could extract more synergies than expected from the Sprint deal.
“Five weeks into the deal, we may be able to move faster than we expected on retail rationalization which is a big deal for potential value unlock for us. Not for people but on leases, we will still need the people. And moving faster on network rationalization because we have had two years to plan. We didn’t expect to have two full years to plan it. That was a gift from our government. But we had that time, so we now may be able to move faster than we were planning,” Sievert tells Yahoo Finance, adding better than expected savings may be realized in procurement and Sprint customer churn.
Here’s how T-Mobile (TMUS) performed in the first quarter compared to Wall Street forecasts.
Net Sales: $11.1 billion versus estimates for $11.4 billion
Adjusted Operating Profits: $3.7 billion versus estimates for $3.5 billion
Diluted EPS: $1.10 versus estimates for $1.04
2Q Guidance:
Postpaid Net Customer Additions: 0 to 150,000
Adjusted Operating Profits: $6.2 billion to $6.5 billion (consensus: $5.4 billion)
No net income guidance provided
A great deal of work lies ahead for Sievert and the T-Mobile team.
The company is knee deep in executing on its promised $43 billion in synergies tied to the Sprint deal. Sievert is confident on getting all of them and then some, judging by his comments to Yahoo Finance. The Street isn’t there yet judging by the disparity between T-Mobile’s second quarter operating profit guidance and analyst estimates. More convincing needed is in that arena, but all indications are the company is well down the path of unearthing ways to cut costs and drive scale.
If Sievert could show a few more quarters of progress on profits like he delivered in the first quarter, the stock could easily re-rate higher as is common when two companies merge. But again it won’t be easy amidst a health pandemic that has weighed on store traffic, consumer spending and the pace of new smartphone releases. Verizon and AT&T exist as extremely formidable competitors, of course.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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