The telecom industry is projected to witness solid growth amid the growing internet penetration leading to an increase in the number of mobile devices, increased demand for speedier connectivity, and increased investments in 5G infrastructure.
The global 5G infrastructure market is anticipated to reach $48.66 billion by 2028, at a CAGR of 64.8%, driven by the growing adoption of internet of things (IoT) technology.
Furthermore, the worldwide telecom network infrastructure market is expected to exceed $180 billion by 2032. In addition, the $1 trillion Infrastructure Investment and Jobs Act (IIJA) allocated nearly $65 billion for continued broadband adoption and deployment.
Investors’ interest in telecom stocks is evident from the SPDR S&P Telecom ETF’s (XTL) 6.3% gains over the past three months and 4% gains over the past six months.
Verizon Communications Inc. (VZ)
VZ and its subsidiaries offer communications, technology, information, and entertainment products and services worldwide to consumers, businesses, and governmental entities. Its segments are Consumer and Business.
On January 12, 2023, VZ announced the launch of Verizon Mobile for Microsoft Teams—a new service that integrates mobile devices with Microsoft Teams for easier calling and collaboration—as part of its strategic relationship with Microsoft Corporation (MSFT). This collaboration with the tech giant should be beneficial.
Also, on January 5, 2023, VZ announced STARZ as the latest streaming service to join +play beta. Erin McPherson, VZ’s Chief Content Officer, said, “Adding STARZ to the entertainment services available through +play beta gives our customers even more choice when accessing the content they love, and we’re thrilled to have them aboard.”
VZ has paid dividends for 22 consecutive years. Over the last three years, VZ’s dividend payouts have grown at 2% CAGR. While VZ’s four-year average dividend yield is 4.69%, its current dividend translates to a 6.53% yield.
VZ’s operating revenues came in at $34.24 billion for the third quarter that ended September 30, 2022, up 4% year-over-year. Moreover, its wireless equipment revenues increased 22.8% year-over-year to $6.58 billion. Also, its total assets came in at $375.09 billion for the period ended September 30, 2022, compared to $366.60 billion for the period ended December 31, 2021.
VZ’s revenue is expected to increase marginally year-over-year to $138.65 billion in 2023. Its EPS is expected to increase marginally per annum for the next five years. It surpassed EPS estimates in three out of four trailing quarters. Over the past three months, the stock has gained 9.6% to close the last trading session at $40.06.
VZ’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
VZ has a B grade for Stability. In the Telecom – Domestic industry, it is ranked #5 out of 19 stocks. Click here for the additional POWR Ratings for Growth, Momentum, Sentiment, Value, and Quality for VZ.
AT&T Inc. (T)
T provides telecommunications, media, and technology services worldwide. It operates through two segments, Communications; and Latin America.
On December 23, 2022, T and BlackRock Alternatives, through a fund managed by its Diversified Infrastructure business, announced a definitive agreement to form a joint venture to operate a commercial fiber platform. The joint venture called Gigapower, LLC will provide a fiber network to internet service providers and other businesses across the U.S. and should add to its revenues.
T has paid dividends for 38 consecutive years. While T’s four-year average dividend yield is 8.79%, its current dividend translates to a 5.84% yield.
T’s Equipment revenues came in at $5.31 billion for the third quarter that ended September 30, 2022, up 4.6% year-over-year. Its net income increased marginally year-over-year to $5.98 billion. Also, its EPS increased marginally year-over-year to $0.83.
Street expects T’s revenue and EPS to come in at $122.77 billion and $2.56 in 2023. The stock has gained 21.9% over the past three months to close the last trading session at $18.94.
T has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B for Value and Quality. It is ranked #4 in the same industry. Get additional POWR Ratings for Stability, Sentiment, Growth, and Momentum for T here.
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VZ shares were trading at $39.78 per share on Friday morning, down $0.28 (-0.70%). Year-to-date, VZ has gained 2.55%, versus a 2.12% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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