American Bank Ranks AT&T Buy, Verizon Neutral, T-Mobile Neutral

American bank has resumed coverage of the three major telecommunications operators in the United States, AT&T, Verizon, and T-Mobile US. The bank's analysts have assigned a "buy" rating to AT&T, while Verizon and T-Mobile US have received "neutral" ratings. The bank's analysts believe that the telecommunications sector is often overlooked by institutional investors due to its perceived homogeneity and maturity, but they see unique advantages in the three major operators' business strategies, mergers and acquisitions, performance metrics, capital returns, stock buybacks, dividend yields, and earnings expectations.

The analysts note that the three operators are increasingly integrating AI into their business models, viewing it as a catalyst for traffic and enterprise solutions. AT&T is expected to stand out among the three, earning the sole "buy" rating from the bank. The three operators have overlapping but differentiated strategies. AT&T focuses on a "wireless + fiber dual-engine" strategy, with fiber and 5G working together to provide greater backbone bandwidth in the era of AI data deluge. Verizon focuses on a "premium network" and private 5G, with the most aggressive C-band and millimeter-wave deployment, emphasizing network quality. T-Mobile US focuses on "user growth + network efficiency," using a combination of 600MHz and 2.5GHz to achieve cross-low/mid-frequency spectrum advantages, making it an ideal pipeline for consumer-level AI streaming content.

The bank has set a target price of 32 dollars for AT&T, which closed at 28.410 dollars on Monday. The analysts believe that AT&T's balanced strategy will drive performance growth, with strong wireless and fiber assets and targeted capital return plans in the coming years, potentially valuing AT&T closer to or even exceeding T-Mobile US rather than Verizon. The analysts also note that AT&T's fiber business is a key part of its long-term growth strategy, with industry-leading fiber coverage and wireless business assets giving it a competitive edge.

For Verizon, the bank has maintained a "neutral" rating with a target price of 45 dollars, which closed at 42.800 dollars on Monday. The bank notes that Verizon has a high-quality wireless user base, balanced capital returns, and fiber business strategy. Its wireline MVNO business can financially hedge against wireless competition from wireline operators. However, the bank warns that Verizon may face short-term competitive pressures, potentially increasing promotional spending and squeezing profit margins.

The bank has also maintained a "neutral" rating for T-Mobile US with a target price of 255 dollars, which closed at 237.630 dollars on Monday. The bank believes that T-Mobile has strong operational execution and leads the industry in user growth, but its profit growth model is highly dependent on user growth. In a mature industry with aggressive wireline operators entering the wireless market, T-Mobile may be more susceptible to intensified competition. The bank notes that T-Mobile leads the industry in postpaid phone net additions, sales, EBITDA growth, and free cash flow expansion, but may need to adopt more competitive pricing and lower-cost bundled promotions to maintain its net additions guidance of 550-600 million.