AT&T Stock Stagnates Despite $23B EchoStar Mega-Deal to Supercharge 5G — What’s the Market Missing?

AT&T’s stock flatlined today—despite dropping a $23 billion bomb on EchoStar to turbocharge its 5G network. Wall Street yawned. Should they have?

The 5G Arms Race Heats Up

AT&T just weaponized EchoStar’s spectrum in a deal that reeks of desperation to catch Verizon and T-Mobile. Capacity? Check. Coverage? Sure. But at what cost?

Investors Aren’t Buying It (Literally)

Shares barely twitched post-announcement. Either the market’s asleep, or they’ve seen this telco movie before: huge capex, meager returns. ‘But this time it’s different!’—said every CFO before a writedown.

The Bottom Line

AT&T’s betting $23B that you’ll pay more for faster TikTok buffering. Meanwhile, bondholders eye exit signs. Classic telecom—spend billions to earn pennies.

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In August, the Texas-based telco acquired the mid-band 3.45 GHz and the low-band 600 MHz from EchoStar, opening up the latter’s Boost Mobile subscribers to receive their primary connection from AT&T. Both spectrum bands improve 5G performance, although the former provides faster speeds over shorter distances, while the latter provides wide coverage but slower speeds.

AT&T 5G Boost to Improve Streaming and Gaming

AT&T announced on Monday that it has now deployed the low-band spectrum across more than 23,000 cell sites across the U.S. The wireless network provider expects the MOVE to result in “substantial increases in speed and capacity” for its customers across 48 states in the country.

The telecommunications company noted that the new spectrum offers more capacity for streaming, gaming, and AI-powered applications. It expects the deployment to further boost the company’s effort to expand its converged subscriber base — that is, customers using both AT&T’s 5G wireless service and home internet service together.

AT&T Boosts 5G amid Intense Competition

AT&T’s new deployment comes at a time when the company is battling intensifying competition in its wireless business segment. During its most recent third-quarter results, AT&T saw its customer loss in the lucrative post-paid phone service rise by 14 basis points, despite its revenue from providing wireless phone, data, and related mobile services to customers rising 2.3% year-over-year.

Rival Verizon (VZ) also lost 7,000 individual subscribers in this segment. However, T-Mobile (TMUS) added one million new customers in that same category, its highest Q3 additions in over a decade.

Nonetheless, AT&T is betting on its converged subscriber base. In its third quarter, the telco gained over 550,000 new broadband customers from its wired broadband service AT&T Fiber and its wireless counterpart Internet Air. The addition marked its largest increase in over eight years.

Is AT&T a Buy, Sell, or Hold?

Across Wall Street, AT&T shares currently enjoy a Strong Buy consensus rating. This is based on 12 Buys and four Holds assigned by 16 analysts over the past three months.

At $31.08, the average T price target implies over 21% upswing potential from the current trading level.