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The Zacks Analyst Blog Highlights: T-Mobile US, Verizon, AT&T and Dish Network

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Zacks Equity Research
·8 min read
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For Immediate Release

Chicago, IL – January 06, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: T-Mobile US, Inc. TMUS, Verizon Communications Inc. VZ, AT&T Inc. T and DISH Network Corporation DISH.

Here are highlights from Tuesday’s Analyst Blog:

Wireless Carriers Vie for 5G Airwaves in Record Bidding

The intense bidding process for 5G airwaves in the United States is continuing in 2021 with wireless carriers aiming to outbid each other. Notably, the FCC-run auction has already made it to the record books with combined bidding exceeding $76.5 billion — well ahead of the previous best of about $45 billion in 2015.

The auctioning of some of the airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum — widely known as the C-band — is likely to bring the United States at the forefront of the 5G race and thwart the increased 5G dominance of South Korea and China.

The Auction 107 kickstarted on Dec 8, 2020 and is offering 280 MHz of spectrum in the 3.7-3.98 GHz band that is likely to provide key mid-band spectrum for potential 5G deployments in the next few years. The C-Band offers significant bandwidth with better propagation characteristics compared with mmWave, which has a relatively shorter range and requires a high density of sites to achieve optimum coverage. Consequently, the airwaves are deemed to be prized assets for carriers that lack considerable mid-band spectrum holdings.

About 57 bidders are participating in the go-for-broke auction that is likely to continue for a few more weeks. At a time when the global economy is hard hit by the coronavirus pandemic, the momentous interest in the auction signifies that bidders are willing to spend more money on the 5G spectrum with solid ROI potential.

In addition to cash for the auction, the winning bidders are required to pay an estimated $13 billion to current spectrum users to vacate the airwaves for 5G use. Consequently, wireless carriers are widely expected to dig deep into their financial resources and even tap the bond market with debt offering to fund the investment.

The auction is widely expected to unlock superfast 5G networks covering wide swaths of the country, thereby generating healthy revenues that are likely to offset the high auctioning expenses. The pandemic has further highlighted the need for high-speed, high-bandwidth and low-latency connections — the hallmarks of the 5G network — for digital sustainability.

With digital sustainability being the norm of the day, telecom firms have aided countless people with increased 5G deployments as virtual communication replaced in-person exchanges with social distancing and the work-from-home option in vogue. No wonder that more and more firms are increasingly joining the 5G bandwagon to gain a competitive advantage in this evenly contested field. Let us have a brief rundown of some leading firms in the fray.

T-Mobile US closed its merger with Sprint in April 2020 to create a new wireless behemoth. The deal, which allowed T-Mobile and Sprint to join their high- and low-band spectrum for a faster nationwide 5G rollout, has disrupted the competitive landscape of the U.S. telecom market.

The company continues to deploy 5G with a mid-band 2.5 GHz spectrum from Sprint. It has launched mid-band 5G spectrum in almost 410 cities and towns across the country for customers who want to experience up to gigabit-per-second peak 5G speeds.

It plans to continue lighting up this 5G spectrum at an aggressive pace. In many places, mid-band 5G average download speeds are around 300 Mbps with peak speeds approaching 1 Gbps.

T-Mobile's 2.5 GHz 5G delivers superfast speeds and extensive coverage with signals that go through walls and trees, unlike other 5G networks that are controlled by the mmWave spectrum. With strong financial backing of its controlling stockholder, Deutsche Telekom AG, this Zacks Rank #2 (Buy) is likely to bid strong in the auction to further strengthen its mid-band spectrum holdings. T-Mobile has long-term earnings growth expectation of 18.6%.

Verizon Communications is likely to benefit from a disciplined network strategy, including accelerated 5G deployment despite economic uncertainties stemming from the COVID-19 crisis. The wireless operator is building the 5G home solution and mobile edge computing on the same network and expects to witness a solid 5G momentum in 2021 backed by customer-centric business model and diligent execution of operational plans.

Verizon has completed Dynamic Spectrum Sharing (DSS) trial to accelerate the pace of 5G network evolution. DSS will help the company to deploy lower-frequency bands, including mid-band and low-band spectrum, to deliver an optimum combination of 5G coverage and speed to its customers.

Verizon has systematically invested in 5G technology to gain foothold in the industry. However, the company lacks significant presence in the mid-band spectrum, likely forcing it to invest heavily on it with aggressive bidding. This stock expects to capitalize on the continued 5G boom and outsmart competitive pressure.

With a VGM Score of B, it has long-term earnings growth expectation of 3.5%. Verizon carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

As the first carrier in the industry, AT&T has unveiled its 5G policy framework that hinges on three pillars — mobile 5G, fixed wireless and edge computing. For a seamless transition among Wi-Fi, LTE and 5G services, the company intends to deploy a standards-based nationwide mobile 5G network.

Its 5G service entails utilization of millimeter wave spectrum for deployment in dense pockets, while in suburban and rural areas it intends to deploy 5G on mid- and low-band spectrum holdings. It believes that as the 5G ecosystem evolves, customers can experience significant enhancements in coverage, speeds and devices.

AT&T has expanded its 5G network infrastructure in various markets to serve more than 225 million people. The company continues to invest in its wireless and wireline networks to expand coverage and improve connectivity. However, like Verizon it also lacks considerable presence in the mid-band spectrum, thereby making it a potential high bidder in the auction. This Zacks Rank #4 (Sell) stock has long-term earnings growth expectation of 2.9%.

DISH Network Corp. reportedly became the fourth major mobile carrier in the country after the blockbuster merger of T-Mobile with Sprint and the divestiture of some of their assets to it. The company is building its own 5G network and will require heavy investments in the mid-band spectrum to pose challenges to its rivals.

Consequently, DISH can emerge as a dark horse in the bidding race, gaining sufficient airwaves to strengthen its position in the market. With a VGM Score of A, this Zacks Rank #3 stock has long-term earnings growth expectation of 3.6%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

 

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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