We read through the Fact Book and watched the early morning earnings call (here) and, after all of the analysis and commentary, come back to the opening picture as the clearest indication of T-Mobile’s merger success.

The ability to generate sustained adjusted free cash flow is the strongest correlator to stock price growth. T-Mobile showed their free cash flow fitness in 3Q. They used this free cash flow to buy back 24.8 million shares of T-Mobile stock worth $3.47 billion during 3Q 2023 and through October 20th. And they also lowered their leverage ratio to 2.6x EBITDA (from 2.7x) during the quarter. CFO Peter Osvaldik gave additional 2024 opex and capex hints which we will discuss in a few days.

There are other key performance indicators that explain how cash was generated, but the lead picture really captures the whole story. Sure, wholesale revenues were down, and postpaid net additions were impacted by a host of returned tablets (and services) and laying off a bunch of folks related to the Sprint merger hurts. But T-Mobile grew service revenues without growing service costs (at least materially) and that’s really good.

We are going to wait until Sunday’s Brief to talk about T-Mobile’s fiber strategy. Mike Sievert articulated it very clearly – this is not the time (nor is this the balance sheet) to take on costly M&A. He may as well have said it with a German accent. We agree with this approach to an extent but believe that T-Mobile has the cash to enable other smaller fiber providers to be successful while improving cell site backhaul costs, particularly in rural markets. $3.47 billion builds out at least one million un/underserved homes. Make this a part of a 50/50 grant and that’s 2 million un/underserved homes receiving broadband goodness.

More on Sunday. Bottom line: A good quarter for Magenta, driven by growth (and amazingly low base upgrades – 2.7% – largely because of T-Mobile’s launch of 5G handsets in 2022). The link to all of the earnings materials is here.