Analyst Note| Michael Hodel, CFA |
Sentiment around the U.S. wireless industry, especially Verizon, has turned negative recently. We suspect industry bears hold two key contentions: First, the carriers will perpetually spend egregiously on their networks, primarily buying wireless spectrum whenever the government makes more available. Second, in an extremely mature market, these firms will beat each other up seeking whatever growth remains, punishing revenue and margins. As such, balance sheets will continually need repair and cash available for shareholders will be increasingly limited.