On Wednesday, T-Mobile (TMUS) announced that it was buying Mint Mobile for as much as $1.35 billion in cash and stock. TMUS stock gained on the news. 

Actor Ryan Reynolds, a part-owner of the budget wireless provider, has once again taken one of his business investments and turned it into a profitable adventure.  

“I never dreamt I’d own a wireless company and I certainly never dreamt I’d sell it to T-Mobile,” Reynolds said in a tweet. “Life is strange and I’m incredibly proud and grateful.”

The Canadian has some business sense. Everything he touches seems to turn to gold. If you’re a Wrexham fan, that’s something you’ve probably already noticed about the actor-turned-businessperson.

In 2018, Reynolds bought a piece of Aviation Gin. He went to work promoting the heck out of it. Two years later, Reynolds and his partners sold the gin brand to Diageo (DEO) for $335 million upfront and another $275 million over a 10-year contingency performance agreement. The gift that keeps on giving.     

He did virtually the same thing with Mint Mobile, buying an estimated 25% of the company, promoting the heck out of it, and now he and his partners are benefiting from their hard work and creativity.

The terms of the deal see T-Mobile pay up to a maximum of $1.35 billion with 39% cash and 61% stock to acquire Ka’ena, the holding company for Mint Mobile, Ultra Mobile, and Plum. Beyond these broad strokes, the final number will take some time to be determined based on its performance before and after the deal’s closing.

Founders David Glickman and Rizwan Kassim will continue to run the brands for T-Mobile. Reynolds will continue his creative role, which I assume will include running the funny commercials he does for Mint. 

So, assuming the 25% stake is accurate, and the brands hit their numbers, Reynolds’ haul will be $206 million in stock and $132 million in cash. 

Should Reynolds hang on to his TMUS stock for the long haul?

Here are the pros and cons.

He Believed in Mint Mobile. Of Course, He Should Keep Them 

Unless T-Mobile mistreats his partners, I can’t imagine why he’d sell his stock. After all, he had no problem owning Mint Mobile before America’s third-largest wireless carrier acquired it. 

Why would he have a problem after? His ownership is now a smaller piece of a big pie rather than a big piece of a small one. 

Not that he cares, but Barchart.com data shows that 16 analysts covering T-Mobile give it a Strong Buy (4.75 out of 5) with a mean target price of $179.28, 24% higher than where it currently is trading.

Reynolds is hard-working, but if he can get 24% returns on his money without lifting a finger, I think he’d be more than fine letting it ride. 

And you’ve got to admit, T-Mobile’s business is currently cooking. 

In 2022, it had 6.4 million postpaid net customer additions, up from 5.5 million a year earlier. That translated into $45.92 billion in postpaid service revenues, 7.9% higher than in 2021. 

Its free cash, something I’m always watching, grew 35.6% year-over-year to $7.66 billion, up from $5.65 billion a year earlier.

“With record postpaid account and customer net adds that translated into industry-leading postpaid service revenue and cash flow growth, T-Mobile absolutely smashed 2022 by once again focusing on putting customers first,” said Mike Sievert, CEO of T-Mobile.  

It did so well in 2022 that it expects its postpaid net customer additions to lead all wireless carriers in 2023, adding 5.25 million at the midpoint of its guidance.

YTD, TMUS stock hasn’t done much, up just 3.2%. However, once Reynolds gets on board, expect its share price to double overnight. The man’s got a Midas Touch. 

The Downside of Hanging On to TMUS Stock

I’ve never been keen on wireless carriers like AT&T (T) and Verizon (VZ). I do like T-Mobile’s Un-carrier philosophy. However, in 2022, its free cash flow as a percentage of total revenue was less than 10%. 

It’s got to do better. It plans too. T-Mobile’s guidance is between $13.1 billion and $13.6 billion, 75% higher than this past year. And it continues to find billions in synergies from its Sprint acquisition. 

If I’m being honest, the biggest downside to owning T-Mobile stock for the actor is that he won’t have as much capital to put into new business ventures. 

However, at the end of day, TMUS stock gained 123% over the past five years, 3x the S&P 500. So I’m pretty sure he won’t have a problem getting similar returns over the next five.

T-Mobile’s purchase of Mint Mobile, and by extension, Ryan Reynold’s face, is a brilliant move to build the lower end of its customer base while retaining the Un-carrier philosophy. 

If you don’t own TMUS stock, you might want to buy it now that Ryan Reynolds is on board. He seems to know a good thing when he sees it. 

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