Takeaways From Telecom Earnings So Far

Michael Hodel: The main takeaways from telecom earnings thus far with AT&T, Verizon, and Comcast reporting, said the wireless industry remains more or less as competitive as it has been over the last few quarters. Maybe a little bit more competitive early in 2019 than it was a year ago, but by and large, AT&T and Verizon seem to have figured out how to turn promotional activity on and off just enough to roughly maintain the size of their customer bases. We haven't the results yet from T-Mobile or Sprint, but we suspect that T-Mobile continues to grow at the fastest rate of any of the wireless carriers taking share. But then again, AT&T and Verizon, with the scale that they enjoy, continue to do very well in the market. We've also seen AT&T pull back pretty substantially on their promotions around television services, particularly their online or DirecTV Now offering and their satellite television offering, which has led to customer losses at AT&T, but has also led to very nice margin expansion for the company in their satellite and consumer business. On the flip side of that, Comcast had yet another great quarter of market share gains, while maintaining really nice pricing with their customers on the strength of their broadband offering. Right now, we think AT&T is the most attractively priced telecom stock in the US. It's been beaten up because of some of the--we believe--missteps that the company has made over the last couple of years with capital allocation. But we still think the company holds a number of great businesses, and they're trading at a pretty nice discount to fair value today.