As the opening chart shows, there was minimal movement in equity values ahead of earnings over the last week – both the Fab Five and the Telco Top Five increased their combined market capitalizations by $9 billion. One increased that amount on a base of $15.3 trillion (0.06%) while the other grew 1.4% on a base of $665 billion. Outside of hand wringing over Apple’s future (which we discussed in last week’s Brief – link below), there wasn’t a lot of momentum. Three of the Fab Five are approaching $4 trillion market capitalizations. Our belief is that two of them (Microsoft and Google) will have earnings surprises that push their values above the $4 trillion mark (it is not a coincidence that these two equities also have the largest negative net debt balances).
The earnings parade starts this Wednesday a.m. with AT&T and ends in mid-February with T-Mobile (which includes a Capital Markets Day presentation):
We discussed our expectations for AT&T, T-Mobile and Charter in last week’s full Brief (here). Last Tuesday, Verizon CEO Dan Schulman sent a short but sweet note to all Frontier and Verizon employees announcing the closure of the transaction. The combined company now covers “approximately” 30 million fiber passings, making them the second largest fiber deployment to AT&T (at 31.2 million passings as of 3Q 2025 and expected to be right at 32 million passings at year-end). But Verizon also inherits 5.7 million copper passings (43% of the Frontier base), as the following chart shows:
On the following page, Frontier discloses a 31.3% residential penetration, which has stayed in a relatively narrow range (30.2% – 32.2% over the 11 quarters) even as Frontier has more than doubled the base. Using the “slightly less than 30 million passings” reference from Dan’s post, we can imply around 18 million FiOS passings (29.4 million total minus 9.1 million 4Q estimated frontier passings minus two million nationwide business passings = 18.3 million FiOS residences passed).
Assuming that penetration is close to reality, and that it has not been growing nearly as quickly as Frontier’s, Verizon has roughly 40% residential penetration entering 2026. That figure has grown ~1.7% over the last eight quarters. Dan refers to the Frontier team as “scrappy”, likely because Frontier’s base penetration (detailed in their earnings release) has grown 3.0-3.2% over those same eight quarters (to 48-49% penetration) without the benefit of a large wireless base (or any substantial MVNO offering). Given this large gap, we would expect to see some major changes in fiber leadership with more Frontier executives retained.
We will discuss this in greater detail in an upcoming Brief, but, unlike AT&T (at least until Lumen is approved), Verizon has both integration risk and new fiber deployment risk. Both have wireless, and both have very strong supply chain and engineering organizations. The fact that Frontier, without wireless, can achieve close to 50% penetration, says a lot about where Verizon and AT&T (and T-Fiber) can take their respective organizations.
Full file is below. Is you are attending this year’s Metro Connect or have additional quesitons on the file or comments made in this Brief, please direct them to [email protected]. Stay warm!
