The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (February 3)

by | Feb 4, 2023 | TSB

Editor’s note: We have updated share counts for each of the Fab Five except Amazon but SEC 10-K reports have not been issued for some of the Telco Top Five. We anticipate all of the share counts will be updated by the end of February. All share counts that remain to be updated are in italics.

Despite some profit taking on Friday, each of the Fab Five finished the week with gains. In total, they gained $365 billion for the week (roughly the combined values of T-Mobile + Verizon) and have gained more than $1.1 trillion year to date in 2023 (re: this follows on the heels of a $3.8 trillion loss in 2022). The Telco Top Five also had a positive week, with Verizon leading the way with $4 billion in market cap gains. The gap between Verizon and market cap leader T-Mobile continues to dwindle and now stands at $6 billion or just over 3%.

What is interesting about the Fab Five accumulated gain is that it comes with a) a blowout jobs report (New York Times analysis here) where nearly every sector of the economy added jobs, and b) continued tough language (and a 25 basis point hike) from Federal Reserve Chair Jerome Powell this week (CNBC article here). As one market commentator put it “Higher interest rates are here for the short and medium-term, but the markets don’t really seem to care.”

T-Mobile reported earnings this week and teased additional news concerning their fiber/ local/ rural initiatives. We are going to have a more extensive analysis of their earnings call next Sunday, but Magenta’s synergy-related momentum continues. The full earnings transcript is available from Seeking Alpha here and the full earnings package from the company is here.

One nuanced but important item from the Telco Top Five is Charter, as this week represents the first full week where the stock remained at or above early to mid-December levels (after their investor update on December 13, the stock plummeted 16% in one day and bears and short-sellers hammered away for a month on the stock). Interestingly, it’s completely recovered from these levels as some industry analysts have decided that a rural/ suburban/ metro blend might not be so bad for an incumbent with market-leading shares.

Finally, we continue to watch the slow progress of the AT&T/ BlackRock JV. John Stankey, AT&T’s CEO, called the JV a “discussion” in a CNBC interview on Friday (full transcript here). While it still sounds like a deal gets done, it doesn’t sound like it’s going to come next week. But, as AT&T indicated on their earnings call, when the announcement does come, at least one project (we assume that’s the one in Arizona) will quickly follow.

File is below. See the note above as share counts will not be final for each of the ten stocks until all 10-K/ 10-Q reports are published.

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