Profits to shareholders before investment

T-Mobile US sees an enormous jump in cash as it reduces capex after the mid-band build. CEO Mike Sievert says:

I mean the cash is there in our plan. And at ’23-’24 and ’25, as we said in last year, we saw our way and see our way to $65 billion in cash flow in those years. And so the cash is there in the plan. 

Where will the money go? Sievert:

we see an aspiration for $60 billion in buybacks in ’23-’24 and ’25 

Almost all telecom executives put shareholders ahead of long-term investment. With CEO income usually tied to the share price, execs have an enormous incentive to focus on short-term returns. The result: almost all telcos invest less than is ideal for the companies. Of course, lower investment is against public policy

Giving 90% ($60B of $65B) of windfall increased profits to shareholders is extreme. 60%-80% is more common. That’s the problem with “investment incentives.” In the real world, most of the money does not go to investment.

T-Mobile is controlled and mostly owned by Deutsche Telekom. DT, through ETNO, is screaming for European “investment incentives.” DT/ETNO publications are extreme misinformation. They typically assume 100% of the increased cash flow will go to investment. If that were even half-true, the CEOs of DT, BT, Orange, & Telefonica are massively misleading investors. That’s a violation of US security law and I believe European as well.

“Any ETNO members groveling for cash would risk appearing like pinstriped bankers in the queue for a soup kitchen.” Iain Morris

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