One of the hallmarks of the Trump campaign was the focus on eliminating unneeded and burdensome over-regulation. In fact, many business leaders have pointed to excessive rules and regulations as the biggest hindrance to putting more corporate capital to work. Two areas that are expected to benefit big when the new administration is in office are telecom and cable.
In a new research report Jefferies notes that the new Federal Communication Commission under Trump is likely to roll back the previous administration’s decisions, and two of the biggest items that could be reversed or modified are Title 2 of the Communication Act and net neutrality.
The Jefferies team notes this in the report in regards to Title 2:
This is almost a certainty and would be a significant positive for both telecom and cable, with telecom perhaps benefiting slightly more given exposure to both wireline and wireless. Look for more usage based pricing and pricing power for standalone broadband products.
They mention this in regards to net neutrality:
This will be particularly positive for large telecom and cable. as they may soon be able to take payments from Google, Facebook, etc to have their data/bits travel faster than others.
Four companies could be big winners according to Jefferies.
This company has had an incredible run this year but is off over 10% in less than six weeks. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With its shares trading at a very cheap 14.3 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.
AT&T is the top dividend-paying stock in the US 1 portfolio and has several major catalysts that likely will drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-Verse subscribers and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address ongoing traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.
Other top Wall Street analysts have cited the company’s positive commentary on free cash flow and improving video/broadband trends later this year, with single truck-roll and new converged offerings expected to be coming next month.
AT&T investors receive a 4.96% dividend. The Wall Street consensus price objective is $40.76. Shares closed on Tuesday at $39.48.