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T-Mobile US (TMUS) raised parts of its 2026 outlook on October 28, but the stock has lost 31.6% over the past twelve months, while the S&P 500 returned 13.3%. A holder at today’s lower price still needs to know what could go wrong next. Much of the damage came in October, when the stock fell 13.3% on October 9 and 7.7% on October 23 on SpaceX’s push to become a US mobile carrier. On that October 28 earnings call, management named one risk itself, tied to the phones it sells in the holiday season. So what did management warn about?
T-Mobile Management Flags Rising Phone Subsidies
Management warned that the cost of putting a phone in a customer’s hand keeps rising. On the October 28 call, it said subsidies, the discounts carriers give on a new phone, have increased over the past three to five years because the phones themselves cost more.
Management also expects a less predictable fourth quarter of 2026. It pointed to a staggered iPhone launch and higher device prices, and said competition in that quarter will show more variability than usual. Churn, the share of customers who leave, should rise too. Management said the holiday season usually makes the fourth quarter a higher-churn period than the third, and it expects account churn to go up.
That is the threat in plain terms. T-Mobile may have to keep spending more on phone deals to win and hold customers.
What Do T-Mobile’s Numbers Show So Far?
Management expects the postpaid business, the segment of customers who pay after each month of service, to lead the growth in about $76.8 billion of service revenue for 2026. That total would be 8% more than in 2025.
Over the past five quarters, T-Mobile recorded its thinnest gross margin during the holiday quarter. The margin was 57.8% in the fourth quarter of 2025, against 64.8% in the third quarter of 2025. On the $24.3 billion of revenue T-Mobile booked in that holiday quarter, each point of gross margin came to about $0.24 billion.
The share price is already well off its peak. On October 29, the stock closed 32.8% below its high of $219.11, set on March 6, 2026. At that close, T-Mobile traded at 14.0 times its earnings over the past twelve months, compared with 22.8 for the S&P 500. The stock carried a P/E of 15.5 at the end of September, and only four of the 40 quarter ends since the end of 2016 had a lower one.
How Worried Should T-Mobile Holders Be?
Holders should treat the threat as real and close, and it has started to show up: postpaid account churn rose to 1.09% in the third quarter from 0.97% a year earlier. The third quarter of 2026 was the 17th in a row in which more customers moved their number to T-Mobile than away from it, management said. The company also raised its forecast for full-year postpaid ARPA growth, the average revenue from each customer account, to about 3.5% from 2.5% to 3%.
Subsidies have been rising for years, and management expects the coming holiday quarter to bring more churn and more variable competition. With the stock at a lower P/E than the S&P 500 and near the low end of its own past range on earnings, the price appears to assume a harder road than the third quarter showed.
The figure to watch is postpaid account net additions, the accounts T-Mobile gains minus those it loses, which management expects at about 1 million for 2026. T-Mobile is expected to report its fourth quarter in February 2027.
Does This Mean You Should Act On TMUS?
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