T-Mobile US (TMUS)

Total return at 5 years: 14.9%/year = 12.2% appreciation + 2.7% dividend. The target price ($270) is ex-dividend; the $26 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $317 · Multiples $239) exceeds the market price ($152).

Today — fairly valued: at $152 trades ~36.5% below its value discounted to today (~$239); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Infravalorado: the target price ($270) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$151.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($152) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-6.7%/year) than we project (5.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$10.9 bn of owner earnings in year 5 (vs ~$19.7 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/EBITDA (operador inalámbrico). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Rolling grid: year 0 is the real TTM (revenue of US$92.2 billion as of Jun 30, 2026). T-Mobile is a wireless operator (after the Sprint merger): a 5G network with 185 MHz of 2.5GHz mid-band spectrum, postpaid phone churn of 0.93% in 2025, postpaid account growth + fixed wireless broadband (FWA, +32% customers in 2025). It is valued on EV/EBITDA (the telecom convention): the low multiple (~8×) charges for capital-intensive network capex (§4 — EBITDA ignores capex; at ~8× EBITDA it is equivalent to ~15× EBIT; capex ~$12.5bn ≈ D&A ~$14bn). It is EV-level: net debt of ~$88.6bn (debt $86.3bn + finance leases, a heavily levered balance sheet) is subtracted from EV. EBITDA compounds ~5-6%/year (postpaid account growth + FWA + ARPA + Sprint synergies already captured — integration ended in mid-2024) and aggressive buybacks (~$12bn/year, ~3.5% of the share count — the capital framework is ~$30bn of buybacks+dividends for 2026-27 + $22bn discretionary) compound value per share. Exit multiple 8× = the top of the telecom band [6,9] for the growth, disciplined. ⚠️ Deutsche Telekom controls 52.8% of the capital (56.9% of votes) → it is a controlled company, and there are reports of a possible full merger with DT (since Apr-2026) weighing on the stock — the governance overhang is the central risk, not a deterioration in fundamentals.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $270 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $152, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $270 in 5 years plus $26 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $239. Against the current market price ($152), the margin of safety is 36.5% (trades below the maximum → there is margin) and the total return at that price would be 14.9% annually.

• Multiple vs the band. EV/EBITDA ~8× — the top of the telecom band (6-9×) for the growth. Compressed by the DT overhang.
• The 2026 decline. Pressure on the share price from the DT merger overhang (governance), not fundamentals. It generated a discount on a quality carrier.
• Margin of safety. Base case 5-year ~$266 vs. price ~$191 → total return +15%/year (buyback + EBITDA). The overhang discount is the opportunity; DT's control the risk. Favorable asymmetry operationally.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ High incremental ROIC (compounding)
• ✓ CFROIC backs up the ROIC (104%, cash vs. accruals)
• ✕ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• ROIC vs the 10% bar. ROIC ~10% — just at the bar (spectrum/the network/towers weigh on capital, typical of a capital-heavy telecom). A quality carrier, but a modest-return business.
• Quality of cash. Adjusted FCF ($18bn) inflected as the Sprint integration wrapped up — high quality (recurring subscription). Stock-based compensation is small (~1% of revenue). The EBITDA margin (48%) is high.
• Leveraged balance sheet. Debt ~$86bn + leases — heavily levered (a telecom balance sheet). Investment grade, ample coverage from FCF. Leverage is high but manageable.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

T-Mobile's engine is postpaid account growth (0.93% postpaid churn in 2025, +11% accounts, ARPA +4%) + fixed wireless access (FWA, 7.6M postpaid customers at Dec-2025, +32% — using excess 5G network capacity, at an extremely high incremental margin). The Sprint merger synergies were fully captured (by mid-2024) → Adjusted FCF inflected to $18bn. The capital framework returns ~$30bn of buyback+dividend in 2026-27 + $22bn discretionary; the aggressive buyback (~$12bn/year, ~3.5% of shares) is the engine of per-share compounding. ⚠️ Deutsche Telekom controls 53% and is evaluating a full merger — the governance overhang that dominates the stock.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real, not nominal. The growth (TTM revenue +9.7%, EBITDA +7% in 2025) is real: postpaid account growth + FWA (+32%) + ARPA (+4%). Part comes from M&A (US Cellular), part is organic.
• Growth engine. Postpaid account growth (low churn) + FWA broadband (the new engine) + the captured synergies. Buybacks compound the per-share figure. Saturation is the limit.
• Saturation. The U.S. wireless market is mature → price competition intensifies; FWA has capacity limits. Growth decelerates toward that of a telecom.

• Relevant in 10 years (recurrence). Wireless service + broadband are recurring critical infrastructure (monthly subscription). FWA is a new vector. High recurrence; industry saturation is the limit.
• Pricing power. Moderate: the 'Un-carrier' brand + low churn give some pricing power (ARPA +4%), but saturation + price competition (Verizon/AT&T, cable) limit it.
• Moat and its direction. Wide moat (spectrum + network + oligopoly), stable-to-favorable direction (postpaid account growth + FWA). But low ROIC (~10%) — capital weighs on it. DT's governance is the question mark.
• Deutsche Telekom's control. The central disconfirmer: DT controls 53% + is weighing a full merger that could undervalue the minority shareholders. The risk of a controlled company.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• !Leverage (net debt / EBITDA)Net debt / EBITDA 2.6x
• !Interest coverage (EBIT / interest)4.7x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 104% of ROIC
• !Value creation (ROIC − 10% bar)+0pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.9x — no over-investment
• !Float / working capitalConsumes cash $0.9 bn (positive WC)
• ✓Dilution (SBC % of revenue + shares)SBC 0.9% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Debt ~$86bn + leases — heavily levered (a telecom balance sheet). Investment grade; the capital framework includes de-levering. High but manageable with the FCF ($18bn).
• Cash generation. Adjusted FCF $18bn (inflected post-Sprint), +6%. Covers debt service + the aggressive capital return. High quality (recurring).
• Capital return. ~$30bn of buybacks+dividend 2026-27 + $22bn discretionary. Buybacks (~3.5%/year) are the main use, accretive at a compressed price. The dividend is young (2.1%).

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Skin in the game. The CEO (Gopalan) comes from DT; he meets the 5× salary requirement. ⚠️ The controlling shareholder (DT) dominates governance — the minority shareholders' interests may not be aligned.
• Capital allocation. Clear framework: ~$30bn of buybacks+dividend 2026-27 + $22bn discretionary. Aggressive buybacks at a compressed price are accretive. But DT consents to the large decisions.
• Execution / integrity. Executed the Sprint merger (synergies captured) + the 5G network build-out. ⚠️ CEO transition (flagged risk) + the shadow the DT merger casts over integrity toward the minority shareholders.

• Trades under the overhang of a possible full merger with Deutsche Telekom (the controlling shareholder, 53%) — a governance risk, not a fundamentals one, which keep compounding (EBITDA +7% and FCF +6% in 2025, postpaid account growth, FWA +32%).
• It is a controlled company: DT (56.9% of the votes) can consent to/impose M&A, debt, and even the CEO — a structural discount for weak minority-shareholder rights, which the potential merger exacerbates.
• The result: it trades at ~8× EV/EBITDA, compressed by the governance overhang.

T-Mobile is a case of governance-driven motivated selling: the DT merger overhang weighs on the stock, even though operating fundamentals keep compounding (low churn, postpaid account growth, FWA +32%, an inflected FCF). The perception-reality gap: the market prices in that DT will impose an unfavorable transaction on minorities (a real possibility at a controlled company), but the underlying business is worth more than the compressed price. The opportunity and the risk are the same thing: if the merger resolves fairly (or does not happen), the overhang discount unlocks; if DT imposes an unfavorable transaction, the minority shareholder pays. It is not a riskless bargain — it is a bet that the operating value gets realized despite DT's control.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +8%/year (+44% total): the margin of safety protects the downside. The bull (+22%/year, +175% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• DT control + merger. The central disconfirming risk: DT controls 53% + is evaluating a full merger that may undervalue minorities. The overhang weighing on the stock — a bet on the controlling shareholder's good faith.
• Industry saturation. The mature wireless market → price competition (Verizon/AT&T, cable with MVNOs); FWA has capacity limits. Pressure on growth/margin.
• Leverage + low ROIC. Debt ~$86bn + ROIC ~10% (spectrum/network weigh on it); rate-sensitive. Network capex does not come down. A capital-heavy business with modest returns.
• CEO transition. The change from Sievert to Gopalan (ex-DT) + the restructurings are an execution risk that the 10-K itself flags.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROIC barely matches the 10% bar (the market's opportunity cost), no excess return.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 5% at a multiple/growth of 1.5 → reasonable for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 7% (EBIT/EV) + ROIC 10% → brushes the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -7% vs our 5%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +4%/yr, bull-scenario ceiling +20%/yr over 5y → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: efficient scale, intangibles, switching costs, cost advantage → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -7%, within what we project (5%) — the story squares with the numbers.