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AT&T Inc. (T), Verizon Communications Inc. (VZ), Sprint Nextel Corporation (S) – Telecom’s Big Three: Room for Growth?

Most recently, Sprint Nextel Corporation (NYSE:S) has been in the news for (sort of) bringing its LTE service to New York City — just not for everybody. For citizens in Brooklyn and Bronx, the service will be fully connected by July 30. For the rest of New York, including Queens, Staten Island, and Manhattan, Sprint says these should roll out “in the coming months.” This announcement was made last September, incorporating New York and 100 other cities slotted for the 4G LTE network. Nearly a year later, people are wondering, and investors are growing listless.

The million dollar question

So the question on everyone’s mind is – with mobile technology expanding as it is, record sales of devices, and the app market growing by the second so consumers can do more than ever on their phones, why aren’t the carriers cashing in?

As previously mentioned, I see movement from the first two. Verizon will undoubtedly remain a strong force. Currently, the stock is at $50.28 with a forward P/E of 92. Investors could perhaps wait for a more attractive entry point, but the stock is still a performer.

Likewise, AT&T Inc. (NYSE:T) has the strength to continue. Revenues have increased 2.6% year-over-year, and that growth can be attributed to efficient network operations and an expanding broadband segment. Some may look at the increase in operating expenses increasing 4.9% year-over-year to $25.9 billion as a flag. However, this can be attributed to positioning, and its expanding spectrum and consumer base is the kind of positioning that will keep it competitive.

It seems only Sprint, then, is left holding the bag. The company’s problems stem from four-straight quarters of subscriber waning, a resurgent T-Mobile doing surprisingly well at national and international branding, and, of course, the two previously mentioned goliaths.
The slow deployment of its LTE network makes Sprint even less competitive at a time when the carriers are scrambling to grab a shrinking base of customers. Sprint Nextel Corporation (NYSE:S) is still the smallest iPhone seller among the major carriers. It also, as shown in New York, has a lagging network.

As smartphone sales continue to explode, and mobile usage is expected to grow by a factor of 16 over the next five years, all companies who can capitalize on this kind of growth stand to benefit. It is my prediction that Verizon Communications Inc. (NYSE:VZ) will see the most significant growth in the coming quarters while AT&T Inc. (NYSE:T) will remain steady. Sadly, Sprint’s actions (or half actions) seem to be more ‘struggle’ than ‘strategy.’

The article Telecom’s Big Three: Room for Growth? originally appeared on and is written by Bill Edson.

Bill Edson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Bill is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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