T-Mobile was upgraded by Moody’s to Baa3 from Ba2, making it a rising star – an issuer whose rating has been upgraded to investment grade from non-investment grade. The company has accelerated the achievement of higher-than-expected operating cost synergies post its merger with Sprint in April 2020, and also completed network and operations integration. T-Mobile is on a steady path towards sustained debt leverage below 3.75x. Post the Sprint merger, T-Mobile expected to realize $5.3bn of merger synergies by 2022 and $7.5bn of synergies by 2024. Synergies will exceed Moody’s early expectations by over 25%. The rating agency expects T-Mobile will rapidly upgrade or decommission all legacy Sprint network tower sites by 2022. The company has an extensive asset base and solid industry market position having strong incremental revenue growth. This is also supported by continued subscriber growth, EBITDA margin expansion, and ramping free cash flow over the next 12-18 months. As of March 2022, T-Mobile had $3.2bn of cash on hand and $5.5bn on its revolver facility. Moody’s expects T-Mobile will maintain good liquidity over the next 12-18 months to address debt maturities in 2022-23. The company has a target to achieve net leverage 3.3x by April 2025.
T-Mobile’s dollar bonds were trading higher with its 2.875% 2031s up over 1.1 points to 86.88 yielding 4.76%.