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AT&T vs. Verizon: Which Wireless Giant is a Better Buy Now?
Read MoreHide Full Article
Key Takeaways
AT&T sees postpaid momentum, major spectrum additions and improved 5G and network efficiencies.
Verizon drives growth through expanding 5G, fixed wireless gains and mix-and-match pricing plans.
T shows better price performance and valuation metrics, offering a modest advantage over its peer.
AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) are two major players in the mobile and wireless-connectivity universe with key expertise in their respective domains. Operating as one of the largest wireless service providers in North America, AT&T offers a vast 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.
Verizon provides a vast 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. It has an extensive 4G LTE network coverage and a steadily expanding 5G infrastructure with Ultra Wideband deployment.
Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the broader industry.
The Case for AT&T
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. The company remains focused on improving mobile 5G, fixed wireless and edge computing services to drive growth. AT&T is leveraging Ericsson technology 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. It is also collaborating with Nokia to streamline network services, improve automation, speed up deployment times and improve operational efficiency.
AT&T had inked an agreement to acquire wireless spectrum licenses from EchoStar. The deal, valued at $23 billion, is set to add approximately 20 MHz of nationwide 600 MHz low-band spectrum and about 30 MHz of nationwide 3.45 GHz mid-band spectrum to AT&T’s spectrum portfolio. The acquisition of EchoStar’s spectrum assets will expand AT&T’s presence across 400 markets across the United States. Moreover, the acquisition eliminates the need for the construction of additional cell sites for network capacity expansion. This will lower the capital investment requirements and drive operational efficiency in the long term.
However, despite its effort to reinforce focus on the customer-centric business model with an aim to maintain its customer base, the nationwide wireless service outage that occurred last year has dented customer trust. Moreover, its effort to woo customers with healthy discounts, freebies and cash credits further escalates margin pressures. Stiff competition from Verizon and T-Mobile US, Inc. (TMUS - Free Report) is a headwind. T-Mobile’s strong cash flow position and continuous deployment of mid-band 2.5 GHz spectrum are further intensifying the competition. Declining trends in the wireline business remain a concern.
The Case for Verizon
Verizon is benefiting from the growing demand for its industry-leading 5G portfolio. The company delivers faster peak data speeds and capacity for customers, driven by disciplined engineering and steady infrastructure investments. The company’s 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.
Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid customer additions. Moreover, in the enterprise and wholesale business, Verizon is shifting its revenue mix toward newer growth services like cloud, security and professional services.
Verizon has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download speeds than any other comparable plans. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.
However, the company operates in a highly competitive market, leading to intense price wars. Verizon has announced a three-year price lock guarantee for all its myPlan and myHome network plans. This ensures that the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. Although the customer-first strategy is designed to woo new customers and retain existing ones, it is likely to contract 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.
How Do Zacks Estimates Compare for T & VZ?
The Zacks Consensus Estimate for AT&T’s 2025 sales implies year-over-year growth of 2.1%, while that for EPS suggests a decline of 8.8%. The EPS estimates have been trending northward (up 0.5%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Verizon’s 2025 sales implies year-over-year growth of 2.3%, while that for EPS suggests a growth of 2.4%. The EPS estimates have been flat over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of T & VZ
Over the past year, AT&T has gained 10.9% against the industry’s decline of 7%. Verizon has plunged 9.4% over the same period.
Image Source: Zacks Investment Research
AT&T looks more attractive than Verizon from a valuation standpoint. Going by the price/sales ratio, Verizon’s shares currently trade at 1.88 forward sales, higher than 1.44 for AT&T.
Both AT&T and Verizon expect sales to improve in 2025. However, AT&T boasts a better price performance and has comparatively more attractive valuation metrics. Consequently, AT&T appears to have a slight advantage over Verizon and is therefore a better investment option at the moment.
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AT&T vs. Verizon: Which Wireless Giant is a Better Buy Now?
Key Takeaways
AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) are two major players in the mobile and wireless-connectivity universe with key expertise in their respective domains. Operating as one of the largest wireless service providers in North America, AT&T offers a vast 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.
Verizon provides a vast 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. It has an extensive 4G LTE network coverage and a steadily expanding 5G infrastructure with Ultra Wideband deployment.
Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the broader industry.
The Case for AT&T
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. The company remains focused on improving mobile 5G, fixed wireless and edge computing services to drive growth. AT&T is leveraging Ericsson technology 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. It is also collaborating with Nokia to streamline network services, improve automation, speed up deployment times and improve operational efficiency.
AT&T had inked an agreement to acquire wireless spectrum licenses from EchoStar. The deal, valued at $23 billion, is set to add approximately 20 MHz of nationwide 600 MHz low-band spectrum and about 30 MHz of nationwide 3.45 GHz mid-band spectrum to AT&T’s spectrum portfolio. The acquisition of EchoStar’s spectrum assets will expand AT&T’s presence across 400 markets across the United States. Moreover, the acquisition eliminates the need for the construction of additional cell sites for network capacity expansion. This will lower the capital investment requirements and drive operational efficiency in the long term.
However, despite its effort to reinforce focus on the customer-centric business model with an aim to maintain its customer base, the nationwide wireless service outage that occurred last year has dented customer trust. Moreover, its effort to woo customers with healthy discounts, freebies and cash credits further escalates margin pressures. Stiff competition from Verizon and T-Mobile US, Inc. (TMUS - Free Report) is a headwind. T-Mobile’s strong cash flow position and continuous deployment of mid-band 2.5 GHz spectrum are further intensifying the competition. Declining trends in the wireline business remain a concern.
The Case for Verizon
Verizon is benefiting from the growing demand for its industry-leading 5G portfolio. The company delivers faster peak data speeds and capacity for customers, driven by disciplined engineering and steady infrastructure investments. The company’s 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.
Verizon is witnessing significant 5G adoption and fixed wireless broadband momentum with premium unlimited plans. It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid customer additions. Moreover, in the enterprise and wholesale business, Verizon is shifting its revenue mix toward newer growth services like cloud, security and professional services.
Verizon has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download speeds than any other comparable plans. The telecom giant plans to accelerate the availability of its 5G Ultra Wideband network across the country. The company’s growth strategy includes 5G mobility, nationwide broadband and mobile edge compute and business solutions.
However, the company operates in a highly competitive market, leading to intense price wars. Verizon has announced a three-year price lock guarantee for all its myPlan and myHome network plans. This ensures that the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. Although the customer-first strategy is designed to woo new customers and retain existing ones, it is likely to contract 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.
How Do Zacks Estimates Compare for T & VZ?
The Zacks Consensus Estimate for AT&T’s 2025 sales implies year-over-year growth of 2.1%, while that for EPS suggests a decline of 8.8%. The EPS estimates have been trending northward (up 0.5%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Verizon’s 2025 sales implies year-over-year growth of 2.3%, while that for EPS suggests a growth of 2.4%. The EPS estimates have been flat over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of T & VZ
Over the past year, AT&T has gained 10.9% against the industry’s decline of 7%. Verizon has plunged 9.4% over the same period.
Image Source: Zacks Investment Research
AT&T looks more attractive than Verizon from a valuation standpoint. Going by the price/sales ratio, Verizon’s shares currently trade at 1.88 forward sales, higher than 1.44 for AT&T.
Image Source: Zacks Investment Research
AT&T or Verizon: Which is a Better Pick?
Both AT&T and Verizon carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both AT&T and Verizon expect sales to improve in 2025. However, AT&T boasts a better price performance and has comparatively more attractive valuation metrics. Consequently, AT&T appears to have a slight advantage over Verizon and is therefore a better investment option at the moment.