Company Evaluation Paper on T-Mobile

Basic Description of the Company

T-Mobile is a joint French and German-owned mobile broadband and networks operator. Lately, the company operated as a joint venture between Wireless and Cable and also American Cable provider. T-Mobile is a subsidiary of Deutsche Telekom AG which happens to be a telecommunication service provider. The company majorly deals with wireless telecommunications and host of a number of servers like, text messaging, voice, data communication and video calling, wholesale markets, and data communications to the clients of prepaid and postpaid services (Plunkett, Jack W., Balan, Andreea, Brison, Brandon, Jordan, Daniel P., & Kolber, Maria, 2008)

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T-Mobile mission is to redefine the way consumers and also business buy wireless services via leading service and product innovation.

Moreover, the company's mission has changed because of the marge that has existed. Currently, the brand is in eleven European countries and approximately 150 million subscribers. Hence, it ranks the country as a third-largest services provider regarding subscribers and also the third biggest multinational after Spain's Telefonica and UK's Vodafone.

T-Mobile is defined by some sets of traits like age, size in the sale, culture, total assets and the size of employees. The company traces its roots to the 1994 foundation of Voice stream as a subsidiary of Western Wireless Corporation; hence as at now, it is around 18 years old. Currently, it has approximately 44000 staffs and reports a revenue of $40.6 billion as of 2017. Regarding location, the company has its headquarters in Bonn, German. T-Mobile has a total asset ranging at around 70.18B. The company uses Un-carrier a marketing campaign strategy. The company has been on an upward trend because of the strategy that the company uses has made the company record successes. It is also clear that the formally fading wireless carrier as described by many has been able to double its revenues. For instance, after elections, Legere confirmed that he got way past the argument and was very optimistic about the impact. The latter was a strategy that the company adopted, and it was the reason for its success.

T-Mobile Financial Analysis

In the long run, profitability is what matters for any business. Firms need to continuously grow both their bottom-line revenues as well as their top-line business. Companies have to build up their equity base through additional retained earnings which should be reported in yearly. Therefore, devoid of realizing profits, T-Mobile may have some negative results along the way. Currently, T-Mobile commands an elevated price to earnings ratio of even over 60%. Compared to its competitors in the same market, they exhibit a price per earning as little as 20s.

Debt/Equity Ratio

Given the limited cash flows and earnings from operations, T-Mobile is compelled to use much of debt to compensate for the shortfall. The shortfall has been direct as a result capital expenditures that have been escalating for the past five years as a result of the company's growth plans. Considering the most recent quarter, T-Mobile D/E ratio has been 1.5, which means that the firm's debt is like 50% more compared to its equity capital (Weaver, 2011). Considering a relatively high financial leverage, the company's financial strengths might be affected negatively ideally because T-Mobile lacks sufficient funds to cover its interest expenditure. Therefore, either restraining itself from using much of the debt or becoming profitable, T-Mobile can obviate any probable liquidity risks.

Return on Equity

In spite of the T-Mobile using debt, its return on equity is still a meager as compared to over 26% from industry and 35% from its aristocrats (Ketz, Doogar & Jensen, 2016). It might, therefore, be hard for T-Mobile to hit the market share and raise its revenue. It is evident that nowhere to attach the element of cost, considering the need to incur most of operating expenses to maintain the anticipated growth. Amalgamation with other communication and media firms that have got an established client base would be of help to T-Mobile to grow in the most cost-effective way. As it stands in today's business environment, wireless companies which standalone they become disadvantaged when competing with amalgamated players who possess distribution, content and even broadband and mobile internet. Consequently, the best way for T-Mobile to get more returns for the shareholders is by becoming part of an enormous operation that includes wireless, broadband and entertainment.

T-Mobile SWOT Analysis

Strengths

As among the leading firms in the industry, T-Mobile has some strengths which facilitate it to flourish in the marketplace (Pride & Ferrell, 2010). First, it has got strong cash flows that give it resources in the company's hand for expansion into the new projects. Secondly, the firm has an efficacious track record in product's innovation. Thirdly, T-Mobile does well at the execution of the new projects and gets good revenues on the capital expenditure through the generation of new income streams. Another strength is that the company has strong and elaborate suppliers and distribution channels that can reach most of its prospective market.

Weaknesses

These are some of the areas in which T-Mobile cab be able to improve upon. Such areas can be sorted when the company considers hinging on the competitive advantage as well as strategic positioning. First, the company compared to others, it has gone high abrasion rate and therefore, it has to spend pretty higher. Secondly, financial planning is ineffectively approached. Considering both liquid asset ratio and current asset ratio, T-Mobile can use cash efficiently as compared to what it is currently doing. Thirdly, considering the company's agenda to expand to other areas, it requires to invest in technology and then integrate the entire process across. Lastly, T-Mobile has had limited success when trying to move to other possible product segments with its prevailing culture.

References

Ketz, J. E., Doogar, R. K., & Jensen, D. E. (2016). A cross-industry analysis of financial ratios: Comparabilities and corporate performance. New York: Quorum Books

Plunkett, Jack W., Balan, Andreea, Brison, Brandon, Jordan, Daniel P., & Kolber, Maria. (2008). Plunkett's Wireless, Wi-Fi, RFID and Cellular Industry Almanac 2009. Plunkett Research Ltd.

Pride, W. M., & Ferrell, O. C. (2010). Marketing. Mason, OH: South-Western/ Cengage Learning

Weaver, S. (2011). Essentials of Financial Analysis. Blacklick: McGraw-Hill Publishing.