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US Telecom giants
29
Jan
US Telecom giants

 

Our today's overview is devoted to the five largest telecommunications companies in the US. They are not just formal leaders: they build up the whole US telecom market and play a real key role. The performance of rest of the US telecoms is much inferior to those listed in our today's overview, and they are significantly less familiar to the clients. 

The largest telecom companies are included into the S&P 500 index. Some of them are also listed in the more specific and prestigious indexes: Dow Jones and S&P 500 Dividend Aristocrats.

 

1. American Telephone and Telegraph (AT&T)     

  • Ticker: T  
  • Stock Exchange: NYSE
  • Annual turnover: $132B    
  • Capitalization: $212B
  • Rank worldwide and in the US by annual turnover: 1, 1
  • Rank worldwide and in the US by capitalization: 1, 1
  • Number of clients: 126M
  • P/E: 41
  • Annual dividend income: 5.5%

Alexander Bell testing one of the first phone models in 1870s. 

This company is not only American, but also world champion in a number of aspects. Despite having a rather small number of clients - compring to the giants like, say, China Telecom - AT&T definitely outruns them by annual turnover and capitalization. Not to mention that it is, well, the very first telephone company in the world. It was founded in 1885 by the inventor of the first phone in mass production, Alexander Bell. AT&T today is a service provider in most telecom directions: telephony, Internet, TV, etc. AT&T is included into Dow Jones and S&P 500 Dividend Aristocrats indices (and it is unalterably ranked among the leaders of the lists.)

 

t копия.jpg

AT&T beat the record of the stock price in 2007. In 2008 they crashed, and recovered by 2012, but still never reached the level of 2007.

AT&T stocks may be attractive to those investors who are more oriented to the long-term horizons. Judging by the high P/E, the stock prices are not supposed to boom, but the high dividends and their stable increase may bring additional bonuses.

 

2. Verizon Communications

  • Ticker: VZ
  • Stock Exchange: NYSE
  • Annual turnover: $132B
  • Capitalization: $187B
  • Rank worldwide and in the US by annual turnover: 2, 2
  • Rank worldwide and in the US by capitalization: 3, 2
  • Number of clients: 109M
  • P/E: 11
  • Annual dividend income: 4.8%

Verizon brand store.

This company appeared in 1983 after the anti-monopoly division of AT&T. Currently Verizon and AT&T are very close in terms of performance indicators. They have almost equal turnover and the number of clients: Verizon is only a half-step behind. As for the wireless network coverage Verizon even outruns its closest rival, AT&T. Verizon is listed in Dow Jones index. Since 1980s, Verizon pays dividends every year. Their size is also close to what AT&T pays to its stakeholders, but Verizon's stocks are not yet listed in S&P 500 Dividend Aristocrats due to their unstable growth.

vz копия.jpg

Verizon did not suffer much from the 2008 crisis and beat the previous stock price records in 2012-2013.

Judging by the P/E indicator, Verizon is undervalued. The low P/E, high dividends and the generally stable position makes the company's stocks worth being invested into.

 

3. Sprint

  • Ticker: S
  • Stock Exchange: NYSE
  • Annual turnover:  $35B
  • Capitalization: $10B
  • Rank worldwide and in the US by annual turnover: 12, 3
  • Rank worldwide and in the US by capitalization: 25, 5
  • Number of clients: 59M
  • P/E: ?
  • Annual dividend income: -

Carriage with Brown Telephone engineers in the beginning of the 20th century.

Just like AT&T, this company has a rather long history. It was founded in 1899 in Cansas (then it was called Brown Telephone Company). Its main objective was to spread telephone networks in the agricultural areas of the US. Today, Sprint's turnover and capitalization is significantly lower than AT&T's and Verizon's, though the number of clients is not much smaller. The company specializes mainly in the wireless technologies, but it also works in other directions. Since 2013, the Japanese SoftBank owns the majority of the company's stocks.

s копия.jpg

After Sprint was put under control of SoftBank, the telecom's stock prices soared. Soon, however, they started a steep fall. Today they are twice as low as they used to be in 2013 when the company was acquired. The reason is the really unstable financial standing of the company: in 2015, for example, Sprint showed losses.

Despite the company's financial difficulties, Sprint stocks may become a good investment for the risk loving traders: now they are very cheap. If the company returns to the profit level soon, the quotes may rise very quickly.

 

4. T-Mobile US

  • Ticker: TMUS
  • Stock Exchange: NASDAQ
  • Annual turnover: $30B
  • Capitalization: $10B
  • Rank worldwide and in the US by annual turnover: 13, 4
  • Rank worldwide and in the US by capitalization: 26, 6
  • Number of clients: 63M
  • P/E: 63
  • Annual dividend income: -

One of the T-Mobile offices.

This company works mostly with wireless networks: mobile telephony and wireless Internet. Its major indicators are similar to Sprint's, but their dynamics is much more positive. Comparing to the other companies listed in this ranking, T-Mobile is very young: it was founded in 1994. Just like Sprint, T-Mobile is not totally American: the majority of its stocks is owned by Deutsche Telekom.

tmus копия.jpg

Apparently, German management turned out to be more useful for T-Mobile than the Japanese intrusion was for Sprint. Since 2013 T-Mobile's stock prices increased by two times.

Despite the recent success of the company, the investors should be very careful when considering its stocks for purchase. At the moment they are significantly overvalued. Moreover, the company does not pay any dividends. At all.

 

5. CenturyLink

  • Ticker: CTL
  • Stock Exchange: NYSE
  • Annual turnover: $18B
  • Capitalization: $12B
  • Rank worldwide and in the US by annual turnover: 18, 5
  • Rank worldwide and in the US by capitalization: 23, 4
  • Number of clients: ?
  • P/E: 18
  • Annual dividend income: 9.1%

Branded service car by CenturyLink.

Unlike Sprint and T-mobile, this company is targeted more on wired communication services, including wire Interner, cable TV and landlines. CenturyLink was created in 1968, and since that time it regularly pays dividends. For some time it was even included into the S&P Dividend Aristocrats index, but it was removed from the list after a temporarly payment decrease. Nevertheless, nowadays the dividends it pays are one of the highest for the companies of its scale.

ctl копия.jpg

2015 turned out to be tough for CenturyLink: its stocks went down two times and came close to the price anti-record of 2008.

Despite the pessimistic dynamics of the stock price, CenturyLink is still rather attractive for investors. Unlike Sprint, CenturyLink is still profitable, and it stabily pays high dividends. Its stock price is rather moderate, and it might be the right time to buy these assets right now.

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