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Verizon vs. AT&T: Which Telecom Stock Has More Upside Potential?
Read MoreHide Full Article
Key Takeaways
T is expanding its 5G network, fiber footprint nationwide, and is focused on improving user experience.
Verizon strengthens 5G Ultra-Wideband coverage with vast spectrum, deep fiber, and advanced small cells.
Both face intense wireless competition that pressures margins while pushing innovation and growth.
Verizon Communications Inc. (VZ - Free Report) and AT&T, Inc. (T - Free Report) are prominent players in the telecommunications industry. As one of the leading wireless carriers in the United States, Verizon delivers communication services to a vast customer base across the public sector, small, medium businesses and global enterprises as well. AT&T is also one of the larger telecom companies in North America, boasts a large user base and offers a wide array of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.
Per Grand View Research, the U.S. telecom services market is expected to witness a 6.6% compound annual growth rate between 2024 and 2030. The U.S. Fiber to the home market size is projected to grow from $10.7 billion to $21.5 billion in 2030 with a CAGR of 12.7%. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand which of AT&T or Verizon is in a better position to maximize gains from these emerging market trends.
The Case for AT&T
5G deployment and adoption in the United States is driven by a multitude of forces. Spectrum availability and regulatory support were the initial drivers of 5G growth, but currently growing usage of several high-end applications across several sectors has become a key driver. 5G networks enable high-speed internet with low latency. Advanced use cases such as AI applications, IoT devices and cellular vehicle-to-everything (C-V2X) applications require a network connectivity. AT&T is focusing on network infrastructure modernization to gain from this 5G boom.
In order to have a seamless transition among Wi-Fi, Long-Term Evolution (LTE) and 5G services, AT&T intends to deploy a standards-based nationwide mobile 5G network. Its 5G service entails the 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. The company’s also aggressively expanding its fiber infrastructure across the country. Its fiber broadband network has reached 30 million consumer and business locations across the United States.
The company is also collaborating with Ericsson to deploy a commercial-scale open radio access network (Open RAN) across the country to help build a more robust ecosystem of network infrastructure providers and suppliers. The Open RAN architecture facilitates healthy competition among vendors for the supply of essential components and reduces dependence on a single manufacturer. It is likely to offer more flexibility, lower costs and help develop novel ideas to monetize the network. AT&T aims to deploy Open RAN for 70% of its wireless network traffic across open-capable platforms by late 2026.
AT&T is also collaborating with Microsoft to move its 5G mobile network to the latter’s cloud. The process will start with AT&T’s 5G core, which is the 5G network’s main software that connects mobile users with the Internet. The move will enable AT&T to enhance productivity and deliver large-scale network services to meet customers’ needs. The company has extended its long-standing business relationship with Google Cloud to offer end-to-end solutions for improved customer experiences.
However, the company’s margin is affected by intensifying competition in the 5G and Fiber Broadband market. The company faces stiff competition from other industry leaders such as T-Mobile, US, Inc. (TMUS - Free Report) and Verizon. T-Mobile has a strong position in the U.S. 5G market. The company’s 5G network covers 98% of Americans, or 330 million people in the country. About 55% of postpaid customers are using a 5G phone, and 5G devices account for more than half of the total network traffic. The company is steadily expanding into underserved rural regions, which could pose a challenge to AT&T’s 5G initiatives.
The Case for Verizon
Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum. The telecom giant plans to accelerate the availability of its 5G Ultra-Wideband network across the country. Its 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells. The company’s C-Band spectrum offers greater coverage for 5G networks and greater speeds than on low-band spectrum, and paves the way to provide differentiated service of 5G Ultra-Wideband to millions of customers.
Verizon’s customer segmentation strategy, which categorizes different client groups, helps it deliver tailored solutions to different sectors. Such personalized offerings help in client retention and drive average revenue per account growth. Its three-year price lock guarantee will ensure the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. The company also introduced cutting-edge AI-native features to boost customer service. Such initiatives are driving customer engagement.
However, the company operates in a highly competitive U.S. wireless market. High market saturation has made the customer base highly price sensitive, leaving little room for price adjustments. In a bid to expand its customer base, Verizon is spending heavily on promotion and is also offering lucrative discounts, which are weighing on margins.The company recorded high capital expenditures in order to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and upgrade to Intelligent Edge Network architecture. It remains unclear if and when a reasonable return can be achieved from such investments.
To counter these issues, the company has been steadily expanding its portfolio offerings to develop advanced use cases. It has introduced Edge Transportation Exchange, a state-of-the-art mobile-network vehicle-to-everything (V2X) communication platform for connected vehicles. The cutting-edge solution incorporates Verizon’s industry-leading 5G, LTE mobile networks, and Verizon 5G Edge mobile edge compute to enable vehicles to communicate and share important data with each other. Such initiatives open up new streams for revenue generation and bode well for long-term growth.
How Do Zacks Estimates Compare for VZ & T?
The Zacks Consensus Estimate for Verizon’s 2025 sales and EPS implies year-over-year growth of 2.51% and 2.4%, respectively. The EPS estimates have moved northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AT&T’s 2025 sales indicates growth of 2.16% year over year, while EPS is projected to decline 9.29%. The EPS estimates have been trending upward over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of VZ & T
Over the past year, Verizon has gained 9.6% compared with the industry’s growth of 27%. T has gained 50.8% over the same period.
Image Source: Zacks Investment Research
Verizon looks more attractive than AT&T from a valuation standpoint. Going by the price/earnings ratio, Verizon’s shares currently trade at 9.28 forward earnings, lower than 13.41 for AT&T.
Both companies are swiftly strengthening their 5G infrastructure and are also aggressively venturing into the fiber broadband market. However, with a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. Strategic collaboration with various industry leaders to improve customer experience is a positive factor. Its extensive network modernization efforts will boost prospects in the long run. With better price performance and upward estimate revision, AT&T appears to be a better investment option at the moment.
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Verizon vs. AT&T: Which Telecom Stock Has More Upside Potential?
Key Takeaways
Verizon Communications Inc. (VZ - Free Report) and AT&T, Inc. (T - Free Report) are prominent players in the telecommunications industry. As one of the leading wireless carriers in the United States, Verizon delivers communication services to a vast customer base across the public sector, small, medium businesses and global enterprises as well. AT&T is also one of the larger telecom companies in North America, boasts a large user base and offers a wide array of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.
Per Grand View Research, the U.S. telecom services market is expected to witness a 6.6% compound annual growth rate between 2024 and 2030. The U.S. Fiber to the home market size is projected to grow from $10.7 billion to $21.5 billion in 2030 with a CAGR of 12.7%. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand which of AT&T or Verizon is in a better position to maximize gains from these emerging market trends.
The Case for AT&T
5G deployment and adoption in the United States is driven by a multitude of forces. Spectrum availability and regulatory support were the initial drivers of 5G growth, but currently growing usage of several high-end applications across several sectors has become a key driver. 5G networks enable high-speed internet with low latency. Advanced use cases such as AI applications, IoT devices and cellular vehicle-to-everything (C-V2X) applications require a network connectivity. AT&T is focusing on network infrastructure modernization to gain from this 5G boom.
In order to have a seamless transition among Wi-Fi, Long-Term Evolution (LTE) and 5G services, AT&T intends to deploy a standards-based nationwide mobile 5G network. Its 5G service entails the 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. The company’s also aggressively expanding its fiber infrastructure across the country. Its fiber broadband network has reached 30 million consumer and business locations across the United States.
The company is also collaborating with Ericsson to deploy a commercial-scale open radio access network (Open RAN) across the country to help build a more robust ecosystem of network infrastructure providers and suppliers. The Open RAN architecture facilitates healthy competition among vendors for the supply of essential components and reduces dependence on a single manufacturer. It is likely to offer more flexibility, lower costs and help develop novel ideas to monetize the network. AT&T aims to deploy Open RAN for 70% of its wireless network traffic across open-capable platforms by late 2026.
AT&T is also collaborating with Microsoft to move its 5G mobile network to the latter’s cloud. The process will start with AT&T’s 5G core, which is the 5G network’s main software that connects mobile users with the Internet. The move will enable AT&T to enhance productivity and deliver large-scale network services to meet customers’ needs. The company has extended its long-standing business relationship with Google Cloud to offer end-to-end solutions for improved customer experiences.
However, the company’s margin is affected by intensifying competition in the 5G and Fiber Broadband market. The company faces stiff competition from other industry leaders such as T-Mobile, US, Inc. (TMUS - Free Report) and Verizon. T-Mobile has a strong position in the U.S. 5G market. The company’s 5G network covers 98% of Americans, or 330 million people in the country. About 55% of postpaid customers are using a 5G phone, and 5G devices account for more than half of the total network traffic. The company is steadily expanding into underserved rural regions, which could pose a challenge to AT&T’s 5G initiatives.
The Case for Verizon
Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum. The telecom giant plans to accelerate the availability of its 5G Ultra-Wideband network across the country. Its 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells. The company’s C-Band spectrum offers greater coverage for 5G networks and greater speeds than on low-band spectrum, and paves the way to provide differentiated service of 5G Ultra-Wideband to millions of customers.
Verizon’s customer segmentation strategy, which categorizes different client groups, helps it deliver tailored solutions to different sectors. Such personalized offerings help in client retention and drive average revenue per account growth. Its three-year price lock guarantee will ensure the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. The company also introduced cutting-edge AI-native features to boost customer service. Such initiatives are driving customer engagement.
However, the company operates in a highly competitive U.S. wireless market. High market saturation has made the customer base highly price sensitive, leaving little room for price adjustments. In a bid to expand its customer base, Verizon is spending heavily on promotion and is also offering lucrative discounts, which are weighing on margins.The company recorded high capital expenditures in order to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country and upgrade to Intelligent Edge Network architecture. It remains unclear if and when a reasonable return can be achieved from such investments.
To counter these issues, the company has been steadily expanding its portfolio offerings to develop advanced use cases. It has introduced Edge Transportation Exchange, a state-of-the-art mobile-network vehicle-to-everything (V2X) communication platform for connected vehicles. The cutting-edge solution incorporates Verizon’s industry-leading 5G, LTE mobile networks, and Verizon 5G Edge mobile edge compute to enable vehicles to communicate and share important data with each other. Such initiatives open up new streams for revenue generation and bode well for long-term growth.
How Do Zacks Estimates Compare for VZ & T?
The Zacks Consensus Estimate for Verizon’s 2025 sales and EPS implies year-over-year growth of 2.51% and 2.4%, respectively. The EPS estimates have moved northward over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AT&T’s 2025 sales indicates growth of 2.16% year over year, while EPS is projected to decline 9.29%. The EPS estimates have been trending upward over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of VZ & T
Over the past year, Verizon has gained 9.6% compared with the industry’s growth of 27%. T has gained 50.8% over the same period.
Image Source: Zacks Investment Research
Verizon looks more attractive than AT&T from a valuation standpoint. Going by the price/earnings ratio, Verizon’s shares currently trade at 9.28 forward earnings, lower than 13.41 for AT&T.
Image Source: Zacks Investment Research
VZ or T: Which is a Better Pick?
Verizon and AT&T carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both companies are swiftly strengthening their 5G infrastructure and are also aggressively venturing into the fiber broadband market. However, with a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. Strategic collaboration with various industry leaders to improve customer experience is a positive factor. Its extensive network modernization efforts will boost prospects in the long run. With better price performance and upward estimate revision, AT&T appears to be a better investment option at the moment.