Verizon (VZ) And T-Mobile (TMUS) Ask To Swap Spectrum

Tickers in this article: TMUS VZ

NEW YORK (TheStreet) -- Verizon and T-Mobile have filed paperwork with the Federal Communications Commission asking permission to swap high-frequency spectrum across the country.

The #1 and #4 U.S. carriers want to swap AWS-1 and PCS spectrum. The AWS-1 spectrum covers 285 counties and 59 markets, while the PCS spectrum covers 153 counties and 47 markets. The carriers will not exchange network assets or customers, only spectrum.

The proposal shows that all major carriers are looking to improve their wireless as more users switch to smartphones with data plans. The high-frequency spectrum the carriers wish to swap is helpful in urban areas where network traffic is typically most congested.

There's no dollar amount attached to the proposal, so this may be separate from earlier reports that Verizon may sell some of its rural-friendly 700 MHz spectrum to T-Mobile. That deal would reportedly see T-Mobile pay Verizon in cash and more urban-friendly spectrum.

TheStreet Ratings team rates VERIZON COMMUNICATIONS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VZ's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 40.1% when compared to the same quarter one year prior, rising from $1,593.00 million to $2,232.00 million.
  • Net operating cash flow has increased to $11,239.00 million or 18.46% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.48%.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 63.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.37% trails the industry average.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 39.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $0.31 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $0.31).

Tickers in this article: TMUS VZ