Evercore financial analysts have released their latest forecast stating that T-Mobile’s fiber optic business will cover 5 million US users and generate annual revenue of $5 billion by 2030.
Growth Blueprint
The analyst wrote in the investment report: “Looking ahead to 2030, we expect T-Mobile to achieve fiber coverage in 14 million households… and 4.8 million users. Assuming an average revenue per user (ARPU) of $75 and an annual growth rate of 4%, revenue will reach approximately $5 billion by 2030. This is Evercore’s first assessment of the maturity of T-Mobile’s fiber optic business, based on two major assumptions:
T-Mobile will complete the acquisition of fiber optic operator Metronet (previously partnering with EQT to acquire Lumos)
2. Not considering T-Mobile’s bid for other operators such as Lumen Technologies (rumored to be acquired by AT&T for $5.5 billion)
Competitive advantage
Analysts point out that although specific user targets have not been announced, management believes that with a nationwide brand, digital retail channels, and the ability to convert fixed wireless access (FWA) waiting lists in a market with high demand, its long-term market penetration rate will exceed that of traditional fiber optic operators (about 35%).
Expand territory
T-Mobile executives have stated that based on existing partnerships, fiber optic coverage can reach 15 million locations by 2030. Its development path includes:
-In 2021, the first fiber optic service was launched in New York through Pilot Fiber
-Currently, T-Mobile brand fiber optic is available in 32 markets across 8 states through partners such as Tillman FiberC
-Recently acquired Lumos through a joint venture with EQT (currently covering 475000 households and expanding to 3.5 million households in the three central Atlantic states by 2028)
-Approaching completion of Metronet acquisition in partnership with KKR (currently covering 2 million households, expanding to 6.5 million households in 13 states by 2030)
-Applying for federal fiber subsidies through local operators such as Swyft Fiber in Louisiana
Financial forecast
Evercore expects:
-Market penetration rate: reaching 10% within 6 months, 20% within 1 year, and 40% after 2 years
-Pricing strategy: Some Colorado markets offer a monthly fee of $55 for a 500Mbps package (comparable to Lumen and Comcast), but warn that T-Mobile may adopt more aggressive pricing
-Profit margin: Assuming an EBITDA profit margin of 25% for the fiber optic business (analysts believe it may be conservative)
-Cash flow: EBITDA of approximately $340 million in 2026 and $1.24 billion in 2030; Free cash flow increased from 270 million US dollars to 1 billion US dollars during the same period
Controversy over Fusion Strategy
T-Mobile CEO Mike Sievert once questioned the actual benefits of “fixed mobile integration”, but a new trend emerged after the acquisition of Lumos:
-Provide VIP benefits such as dining and entertainment discounts to fiber optic users through “Magenta Status”
-Integrated “T-Life” application (launched for about one year), users can manage mobile/home Internet accounts in a unified way and enjoy Tuesday exclusive discounts
Analysts believe that although the management is cautious about the benefits of integration, the fiber optic business will help increase the net annual number of postpaid mobile phone users by 650000 and wireless service revenue by $200-350 million