Should You Buy T-Mobile Stock For Its Cash?
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T-Mobile US (TMUS) stock is 38% below its March 3, 2025 high, a fall that makes the shares worth a look now. T-Mobile’s free cash flow over the last twelve months equals 9.8% of its market value, compared with 4.2% for the median S&P 500 company. A yield that high means either the shares are a bargain or the market expects the business to shrink, so which is it for T-Mobile?
T-Mobile’s Sales And Cash Are Still Growing
T-Mobile looks more like a bargain than a shrinking business. Its revenue rose 9.3% over the twelve months to September 2026, against 3.5% at AT&T. Management said on the call that the timing of its U.S. Cellular and fiber acquisitions affects year-over-year comparisons. On that October 28, 2026 call, it said postpaid service revenue, without acquisitions, should grow about 7% in the fourth quarter. Free cash flow has risen in each of the last three years, from $6.2 billion in the twelve months to September 2023 to $17.8 billion in the twelve months to September 2026.
That cash matters to a shareholder whether or not T-Mobile pays it out. Each share represents a claim on the cash the business produces, just as it does on profit. Over time, a stock price tends to follow cash that keeps rising.
T-Mobile sells wireless plans, 5G broadband and fiber. It keeps more of each sales dollar as free cash than its rivals do: 18.9% over the last twelve months, compared with 13.8% at AT&T. Capital spending accounted for 38.2% of the cash its operations brought in.
A shareholder also has to weigh T-Mobile’s debt. At September 30, 2026, its debt exceeded its cash by $112 billion, and once that is counted, free cash flow equals 6.1% of the value of the whole business. Operating income covered interest expense 4.7 times over the twelve months.
Where Is T-Mobile Under Pressure?
T-Mobile is under pressure in the fight for customers, and its margin gives a mixed picture. Its operating margin over the last twelve months was 20.7%, down from 22.6% a year earlier. The latest quarter ran the other way: in the September 2026 quarter, the margin was 24.0%, up from 21.9% a year before.
Management said on the October 28, 2026 call that winning customers has become more expensive because phone subsidies across the industry have risen over the past few years with higher device prices. In the same answer, management said T-Mobile’s customer account additions still led the industry.
Management expects some parts of the business to shrink: declines in wholesale and prepaid should offset part of T-Mobile’s 2026 service revenue growth. For 2027 and 2028, it expects to put more of its capital toward the spectrum auctions coming up.
Management’s answer is to get more from each customer. The company raised its 2026 forecast for growth in revenue per postpaid account to about 3.5%, citing customers moving to premium rate plans.
What Should You Watch In T-Mobile’s Next Report?
You should watch whether T-Mobile’s free cash flow keeps rising and whether the company can carry its debt. Management now expects adjusted free cash flow, its own measure rather than the reported figure, of $18.7 billion to $18.8 billion for 2026. That forecast is $150 million higher at the midpoint than the one it gave in July.
On the debt, the question is whether operating income keeps covering interest as T-Mobile spends more on spectrum. T-Mobile is expected to report its fourth-quarter results in February 2027, and its free cash flow over the twelve months, set against its net debt, is the measure to watch.
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