Bank of America Upgrades T-Mobile to Buy, Says LEO Satellite Fears Are Overdone

Bank of America upgraded T-Mobile US (NASDAQ: TMUS) to Buy from Neutral on Monday, arguing that the recent selloff in telecom stocks has created an attractive buying opportunity and that investors are overstating the competitive risks posed by low-earth-orbit (LEO) satellite providers.

T-Mobile shares climbed 1.8% in premarket trading following the upgrade. Despite the gain, the stock has declined roughly 15% year-to-date as concerns over satellite-based wireless services and intensifying competition weighed on the broader U.S. telecom sector.

Bank of America analyst Michael Funk maintained a $220 price target on T-Mobile, saying the company is trading at a trough valuation that already reflects potential competitive threats. According to Funk, market sentiment has turned overly bearish as investors worry that LEO satellite operators could disrupt broadband and wireless services, while speculation over a possible Charter Communications and Comcast combination has added further pressure to the sector.

The analyst also suggested that AT&T, Verizon, or T-Mobile could eventually partner with a LEO provider through a Mobile Virtual Network Operator (MVNO) agreement if competitive dynamics make such deals strategically beneficial. However, T-Mobile management has previously dismissed interest in pursuing that approach.

Bank of America believes T-Mobile is the least exposed among major U.S. wireless carriers to LEO competition because of its customer footprint. Around half of the carrier’s wireless subscribers are concentrated in densely populated metropolitan markets such as Los Angeles and New York, while only about 24% are located in rural areas. In contrast, LEO direct-to-device services have primarily targeted rural and underserved regions where traditional wireless coverage is limited.

Funk noted that satellite-based services currently perform best in sparsely populated areas and still face capacity and signal propagation challenges in crowded urban environments, reducing the immediate competitive threat to T-Mobile’s core business.

The brokerage also highlighted T-Mobile’s strong spectrum holdings, extensive urban wireless network, and limited investment in large-scale fiber infrastructure as strategic advantages. These factors could make the company an attractive future partner for satellite operators if market conditions evolve.

Additionally, Bank of America expects T-Mobile’s competitively priced customer base to provide greater flexibility for future price increases, supporting projected postpaid average revenue per account (ARPA) growth of 2.5% to 3%, reinforcing its positive long-term outlook on the stock.