- AT&T continues to expand its LTE network, reducing the need for actual mobile 5G.
- Google Trends supports the public view of the wireless giant as being in a solid position for the 5G transition.
- The dividend is easily supported due to tax reform, providing a solid 5.7% yield to shareholders.
As the market focuses on the DOJ trial over the Time Warner (NYSE:TWX) merger and higher interest rates, the real key to the AT&T (NYSE:T) investment thesis is the move toward 5G and the dividend support. The wireless giant clearly has a marketing lead and first-mover advantage that will fend off competitors for now.
When AT&T reports Q1 results on April 25 after the market close, Morgan Stanley forecasts the wireless company improving the crucial postpaid phone net adds or, in this case, reducing the losses. The wireless giants AT&T and Verizon Communications (NYSE:VZ) are expected to report improving trends, though still trailing the numbers of Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS).
The numbers would support why the laggards are supposedly in merger talks yet again. Sprint has clearly lost all momentum in adding subscribers, as pricing gimmicks only last so long. While T-Mobile still dominates sub growth and wireless service revenues, the forecasted Q1 numbers suggest a narrowing lead.
The suggestion is that the combination of the domestic wireless sector moving to 5G in the next few years and a reduction in low-hanging fruit places the leaders back in control. Basically, if a subscriber hasn't switched off the industry giants, the desire to move isn't that evident until the other providers change the network leadership situation.