T-Mobile (NYSE:TMUS) should be considered a "super-regional operator" rather than a nationwide carrier, according to MoffettNathanson Research. Which means it has ample opportunity for growth.

Noting T-Mobile's strategy of focusing on heavily populated areas rather than rural or suburban regions, MoffettNathanson reported that T-Mobile operates the fewest retail stores of any U.S. carriers by a wide margin. But T-Mobile "is ahead of the pack" in terms of how many gross customer adds each brick-and-mortar outlet supports, according to MoffettNathanson: T-Mobile added 3,000 new customers per store in 2015, the firm said, compared to 2,600 new Verizon customers for each of its stores and 1,600 for Sprint.

And T-Mobile's small retail footprint will expand as the carrier continues to build out its network, MoffettNathanson argues. Much of that build-out has already occurred using T-Mobile's 700 MHz spectrum, and it could become more aggressive if the carrier accrues more airwaves in the upcoming incentive auction. That will give T-Mobile opportunities to reach consumers in markets that were previously inaccessible for the operator.

"Over the coming three to five years, we expect substantial gains in market share in the suburban and rural markets where T-Mobile used to be uncompetitive," MoffettNathanson said in a research note. "This is the foundation of our prediction that over the balance of our forecasting period, T-Mobile's subscriber growth will not come from aggressive price cuts, but from network expansion."

The firm also said it expects T-Mobile to enjoy increased free cash flow (FCF) thanks to its steadily growing base of consumers.

"Our revised estimates call for FCF of more than $4 per share in 2018E, suggesting a free cash flow yield to equity in the range of 10 percent," MoffettNathanson said, adding that the carrier is its top stock pick in the cable and telecom industries. "Even after a spectacular rally in 2015, the stock is still too cheap."

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