T-Mobile's wireless business is not worth squat.
That's the surprising finding of one Wall Street analyst, who contends the value of the wireless carrier's entire spectrum portfolio is worth more than T-Mobile's current enterprise value.
How much more? About 31 percent more, according to MoffettNathanson analyst Craig Moffett, who worked the math based on the relevant price commanded by the Federal Communications Commission's ongoing auction for spectrum.
"That price says T-Mobile's operating business has less than no value at all," Moffett wrote in a report Monday, which found that T-Mobile's shares were undervalued.
Shares of the No. 4 wireless carrier closed Monday at $25.25, down 6 cents. They are down 25 percent this year.
T-Mobile's depressed enterprise value is the result, in part, Moffett said, of intense price competition. Wireless leaders Verizon and AT&T both issued profit warnings last week as the price wars intensified.
At the same time, T-Mobile has been a takeover target several times in recent years. And it's widely known that majority-owner Deutsche Telekom, with a stake of 67 percent, is still keen on shopping it.
Yet when most recent suitor Sprint withdrew its interest in August, citing regulatory concerns, T-Mobile's stock dropped 24 percent.
Even the FCC auction, despite highlighting the value of spectrum, has worked against T-Mobile.
"The backdrop of soaring spectrum values, which, rather than flattering the valuation of holders has instead (rightly) reminded investors that input costs for carriers will be higher, and returns therefore lower, than had previously been thought," Moffett wrote.
The analyst nonetheless considers the selloff in T-Mobile shares way overdone.
"T-Mobile shares are simply too cheap," said Moffett, who put a target of $40 on stock now trading about 60 percent lower than that.
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