“Make it stop!” is the cry from Jennifer Fritzsche, Senior Analyst at Wells Fargo Securities regarding the drama surrounding the DISH/TMUS/S discussion. Fritzsche said she’s calling “Uncle” in terms of predicting the timing of the deal.
While the market conjecture is still at a boil on those carriers, Fritzsche said investors are worried it will get harder for Verizon (VZ) and sees the upcoming Q2 report on August 1, as offering the first evidence of its struggles.
“The messaging seems to be around slight give on margins but better handset adds,” Fritzsche said. “Despite this, we continue to favor the VZ ‘long ball’ strategy. VZ is doubling down on what it knows best, the network.”
But decisions at VZ are never made in a reactionary way, according to Fritzsche. While some would say FiOS was a failure, she disagrees. She specifically remembers in 2006, when FiOS was being built. All VZ competitors saw no need for fiber to the home, yet those same competitors today are beating their chests as to how impressive their penetration results are where fiber is closer to the home.
“Huh?” Fritzsche said, “now VZ is making decisions today which we believe others will follow over the next decade. If you believe my thesis, don’t sell DY.”
Also in terms of the “getting harder,” in Wells Fargo’s view, a more realistic near term churn worry is the decommissioning of its CDMA base which will force subs to change their handsets. If a S/TMUS merger is completed, Fritzsche feels churn history is more on VZ’s side.
“We have lived through many a merger in the wireless industry and in the majority of the cases – the first nine months post a transition the incumbents are beneficiaries…not share donors,” she said.
July 16, 2019
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