Greetings from Massachusetts, Missouri, Oregon, and Iowa. Pictured are the CEOs who participated in the 2025 Fort Point Capital Annual Meeting earlier this month. Fort Point Capital is the owner of CellSite Solutions.
The day after the last Brief was published, Verizon announced a transition away from current CEO Hans Vesberg with independent Board member Dan Schulman taking the helm. As we will discuss below, we do not believe that this is a long-term change. Verizon also moved their earnings discussionout to October 29th. After a brief market commentary, we will discuss the implications to the telecom industry of concurrent CEO changes at T-Mobile, Verizon, and Comcast.
Earnings announcements start next Wednesday and continue for the ten companies we track through Halloween. The full schedule is shown in the nearby chart.
While we will briefly discuss iPhone 17 availabilty below, the official tracker will be published every Sunday evening until we have most color/ memory sizes in stock for the iPhone 17 Pro and Pro Max models.
The Fortnight That Was
The markets have been remarkably calm over the last two weeks given the government shutdown and China trade disputes. The Fab Five recovered most of their early month losses (-$77 billion to $14.7 trillion cumulative market cap) and three of the five (Alphabet = +33%, Microsoft and Meta = +22%) posting very good returns for 2025. The only one of the Telco Top Five that is in double digits is AT&T (+16%) with Comcast and Charter down 21% and 26% respectively.
Since the end of 2020 (height of COVID), Comcast has lost $132 billion in value while Charter has lost $93 billion. Since the end of 2018 (pre-pandemic), Charter has lost $29 billion while Comcast has lost $42 billion. T-Mobile over the same period has gained $204 billion. We will discuss the value changes at AT&T and Verizon in greater detail below.
On the macroeconomic front, the only meaningful data point that was released since our last Brief is the Treasury Monthly statement (here). The bottom line is that the deficit (11 months) is running 2.2% lower than last year and, as a result, we had to borrow $42 billion less this year than last year. Driving his change are tariffs. Here is the schedule showing the impact of tariffs (which accelerated in the last five months of the fiscal year):
The $118 billion year-over-year beat in Customs Duties is meaningfully contributing (37%) to the $317 billion increase in overall receipts (it also helped increase the size of September’s surplus). And that’s only a partial year – the current annualized run rate for tariffs is $356 billion, 4.6 times the amount collected in the last year of the Biden administration.
While the full impact of tariffs on inflation is not known (it is not showing up in the latest Truflation data – click here for more details), the impact on government borrowing is immediate. Less funding needs for US debt means more opportunities for other funding, driving down borrowing costs for the private sector.
Why is this important to telecom (outside of lower company interest expenses and higher cash flows)? Every 50 basis points on a 30-year, $360K mortgage (20% down) saves the homeowner $115/ mo. That extra disposable income drives up ARPU (and handset upgrades). Lower interest rates, paired with 3%+ real GDP growth, is a recipe for broad-based economic strength. Subscription-dependent companies like telecom are becoming more dependent on discretionary income to grow their revenues.
On the Fab Five front, Apple is rumored to be boosting production of the iPhone 17 by ~2 million units, partially offset by a 1 million reduction in the iPhone 17 Air. iPhone Pro Max is getting a 4 million production boost, and the iPhone Pro increasing by 1 million. This net 6-million-unit volume growth represents an estimated 3% increase over 2024 volumes (better than expectations, but not the super-cycle of 2020). As indicated above, we will have more commentary on the iPhone 17 selling cycle in our Sunday evening interim Brief.
Apple needed some encouraging news. Earlier in the week, it was reported by Murk Gurman at Bloomberg that Ke Yang, senior director of Apple’s Answers, Knowledge, and Information (AKI) search division, was leaving for Meta. The Cupertino giant has been the target of Meta, OpenAI, Perplexity and others over the past year. What impact this has on the expected launch of a revamped Siri remains to be seen, but it surely doesn’t help.
A Trio of CEO Changes
Over a two-week period, three of the largest telecom providers in the world announced CEO changes:
- On September 22, T-Mobile announced that former Board member and current COO Srini Gopalan would be replacing Mike Sievert effective November 1;
- On September 29, Comcast announced that current President Mike Cavanaugh would assume a Co-CEO role alongside long-time CEO Brian Roberts;
- On October 6, Verizon announced that Hans Vestberg would be replaced by Independent Lead Director (and former American Express and PayPal CEO) Dan Schulman.
Each of these three changes has an impact both on the companies as well as the industry. We believe that Verizon’s is the most significant of the three because both the CEO and the Chairman will be new (Hans Vestberg previously held both titles).
T-Mobile has strong marketing and customer service reputation, especially product simplicity and value. They also have a very strong 5G network (Ookla results here, and awards are shown nearby). As we discussed in the previous Brief, Srini Gopolan is a trusted lieutenant of Deutsche Telekom (majority owner of T-Mobile USA). He has the reputation of being a disciplined, structured thinker and a good motivator. He has a strong engineering team led by John Saw and CFO Peter Ozvaldik is stellar (as is Mike Katz who runs marketing, strategy and products). How Srini shapes T-Mobile for Business (Callie Field recently stepped down) will be his first major test.
He needs to do this as he is integrating US Cellular into the T-Mobile family. Overall, the opportunity to create an even greater company is within reach. With AT&T focused on buildout (and integrating Echostar spectrum) and Verizon experiencing its largest management overhaul in a decade, the table is set for T-Mobile to grow market share.
Our questions for Srini are straightforward:
- Can T-Mobile scale with Metronet and Lumos (answer should be “yes” but T-Mobile remains always open to fiber pure plays if the structure is right)?
- Will T-Mobile buy a cable company (we hope not)? If not, how can T-Mobile use its strong stock price to create disproportionate value for shareholders (versus simply buying back shares)?
- Will T-Mobile have a COO (cf: there wasn’t a COO under Mike Sievert)? Will it come from the current management, or from the Deutsche Telekom management pool, or from outside the industry?
- How will the next generation of data impact T-Mobile’s fixed wireless expansion?How will T-Mobile transition from “Challenger” to “Champion” (hint: it’s a combination of digital initiatives as well as continued value focus)?
Next, the transition from a family CEO to an outsider. We think that Mike Cavanaugh’s transition to CEO will be difficult if he is not allowed to reshape and “de-congomlerate” the company. Comcast is the only large telecom company that owns a _________. Movie studio, theme park, cable broadcast network are all viable answers. Here is their current performance (through Q2) by business unit:
There’s a lot of moving pieces. While they are shedding Versant (cable TV content which includes MSNBC, E!, CNBC and the Golf Channel), most of the production is staying (namely Universal and NBC). Content production is highly dependent on creativity and marketing. The connectivity business unit is highly dependent on consistency and ever-improving products (as well as marketing). Theme parks, in addition to site selection and real estate management, are dependent on great content (theme) and consistently delivered experiences (park).
On top of the domestic reach, Comcast is global with Sky, a very large and diverse media and connectivity provider that operates primarily in the UK but also across parts of Europe.
Daily management of this vast range of businesses requires a lot of management bandwidth. One hour, Comcast is competing for NBA programming rights against Disney and Amazon, while the next they are competing against AT&T and T-Mobile for wireless subscribers and then against Apple, Amazon, Netflix, Roku and others for broadcast streaming customers. That’s a lot of work. There was a time when a $110 billion market cap could trounce others, but T-Mobile and AT&T are now larger in the telecom space (70%+ for AT&T and 135%+ for T-Mobile), Disney is valued as of last Friday at $200 billion, and Amazon and Apple now have a combined value of $6 trillion.
Mike Cavanaugh’s first task as CEO is to break up the conglomerate. That means having a hard conversation with the Board and Brian Roberts. Our guess is that conversation has already happened, and that Mike was appointed as Co-CEO to execute a multi-year plan. If he doubts the effectiveness of spinning off production assets, he should have a conversation with AT&T CEO John Stankey. Comcast has a healthy balance sheet and great cash flow – they are spread too thin and face market share losses and relative underperformance if they don’t act soon.
Finally, we have Verizon and our good friend Dan Schulman. The leader of PayPal, Virgin Mobile USA and American Express now takes over for Verizon, a company with a heavy bent toward engineering and finance. Of the three, we view this to be the hardest.
Unlike T-Mobile, Verizon needs to realize that this is the transition from “Champion to Challenger.” Unlike Comcast, cash isn’t pouring out of every business unit. This is a multi-part turnaround, and it’s going to take time and a lot of fresh leadership. Here are the four most important questions we think Dan Schulman needs to answer:
- How does Verizon regain network leadership? Is it as simple as densification?
- Is the value proposition built around myPlan packages or service (or both)?
- It has been 21 years since the original FiOS announcement. Verizon should be leading the FTTH revolution yet was forced to overpay for Frontier because they (incorrectly) determined that there was a minimum number required to reach critical mass. What’s the end game with Verizon’s fiber footprint? Is it higher wireless bundles (hence lower postpaid wireless churn), or is it something else? What’s the local marketing strategy and how can it be changed to grow 3-6-9% market share points over the next three years in existing FiOS markets?
- How does Verizon attract the best and brightest product, marketing, and distribution managers (e.g., “doers”) to work for the company? How are they empowered to grow and innovate in a structure that rewards conformity and standardization? How does this change tomorrow?
All of this needs to happen with a new CEO. Dan is seven years older than the person he replaced and can patch holes in the Verizon ship for several months. But the next leader of Verizon needs to be a Braveheart who can drive Verizon’s value to $400 billion on the way to $1 trillion. Not only does he need to reinstate Verizon’s top status with prospective postpaid wireless customers as “Most want to investigate” but also with prospective shareholders and bondholders as “most want to invest (in).”
Verizon has great assets but needs a makeover. Like AT&T faced in 2020, they have a lot of “quick hit” opportunities followed by years of execution. It’s not too late to win, but time is running out.
We will hear more from Comcast, T-Mobile and Verizon by the next Brief publication. In the meantime, if you have friends who are interested in being notified each time we publish a Brief, please have them sign up at www.sundaybrief.com.
Go Chiefs!
Important disclosure: The opinions expressed in The Sunday Brief are those of Jim Patterson and Patterson Advisory Group, LLC, and do not reflect those of CellSite Solutions, LLC, or Fort Point Capital.
