Results Read-Across and Call Backs (Post #240): Incremental Takeaways from New International Business Wireline JV

Research evidence excerpt

Results Read-Across and Call Backs (Post #240): Incremental Takeaways from New International Business Wireline JV

target price include: 1) competition in wireless further weighing on results; 2) significantly

higher rates that could reduce the appeal of the dividend yield and raise its interest cost; and 3) legacy wireline revenues

and/or capital spending weighing on free cash flow generation. The potential for economic weakness and recession to follow

remains a risk to our financial forecasts and valuation multiples for the company as well as the sector.

We recognize the WSJ investigation into lead sheathed cabling used in the past by the Telcos represents a potential financial

risk (if anything material) that could negatively impact AT&T’s financial outlook.

We are unable to specifically determine risk at this time and include a base-case scenario analysis to incorporate some

potential for risk within our valuation framework. If the financial risk is immaterial or less than our outlook, AT&T shares could

outperform our value expectation, and if the financial risk is greater than we assessed, then AT&T shares could underperform

our valuation assessment and potentially trade below the current share price.

If the impact on the company from any of these factors proves to be greater or less than we anticipate, the stock could either

outperform or underperform our target price.

T-Mobile US

(TMUS.O; US$182.68; 2; 26 Jun 26; 16:00)

Valuation

Our target price of $225 is based on the simple average of three methods: EV/OIBDA, P/FCF, and DCF.

On an EV/OIBDA basis, we value TMUS at an 8.3x multiple on our 2026E Core OIBDA estimate of $37.4 billion to arrive at a

firm value of $309 billion. We deduct 2026E net debt of $89 billion to arrive at an equity value of $220 billion.