Should Investors Cheer a Big T-Mobile Buyback Plan?

At a recent investor conference in Barcelona, T-Mobile US (NASDAQ: TMUS) CFO Braxton Carter said that the company is likely to begin a "significant" buyback program in December, pending board approval. T-Mobile had recently been the subject of merger and acquisition speculation, specifically with Sprint, the fourth-largest mobile carrier in the country. Those merger talks fell through earlier this month, dashing the hopes not only of Sprint, which was looking to join up with No. 3 T-Mobile, but likely also AT&T, Verizon Communications (No. 2 and No. 1), and anyone else hoping for a consolidation of the telecom industry.

Of course, T-Mobile had been negotiating from a position of strength. As I previously wrote, T-Mobile's low-priced offerings, solid balance sheet, and renegade attitude have allowed it to take share in the space, forcing premium-priced telecom companies to follow it into unlimited plans. But the two parties could not come to terms, so T-Mobile will continue on its own to do what it's already been doing: taking share and taking names.

With M&A off the table for now, T-Mobile now has three options for how to use its cash flow: reinvest in the business, pay down debt, or return money to shareholders.

Source: Fool.com