Wells Fargo cautious on AT&T, Verizon and T-Mobile as Starlink looms

Investing.com -- Wells Fargo initiated coverage of the three major U.S. wireless carriers with a cautious sector outlook, flagging SpaceX's Starlink as a growing competitive threat to fixed wireless access and postpaid account growth across the industry.

Analyst Steven Cahall launched AT&T at Underweight with an $18 price target, calling it "least likely to strike a Starlink Mobile MVNO" and therefore most exposed to satellite competition.

Cahall said AT&T is "most at-risk to net add and PP account share loss," estimating a 20% probability of a Starlink MVNO deal versus 30% for T-Mobile and 40% for Verizon.

Verizon was initiated at Equal Weight with a $43 price target and named Wells Fargo's most preferred telco.

Cahall said Verizon has "the most to lose and the most to gain from an MVNO with Starlink," applying a 40% probability to such a deal. He noted that a VZ-Starlink Mobile MVNO "would be mid-to-high single digit percentage accretive to EBITDA/EPS by 2032."

T-Mobile was also initiated at Equal Weight with a $170 price target. Cahall said while T-Mobile has historically been the sector's share gainer, two shifts could pressure postpaid account net adds, including Verizon becoming "less of a wireless share donor" and Starlink reducing industry-wide growth.

He estimated a 30% probability of a T-Mobile Starlink MVNO, saying the company's "success could mean it doesn't perceive value in a partnership."

Across all three names, Wells Fargo expects Starlink's capacity expansion from Starship V3 launches to pressure fixed wireless access net adds industry-wide by 2028.

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