The global telecom services market was valued at $1.80 trillion in 2022 and is projected to grow at a 6.2% compound annual growth rate through 2030, as reported by Grand View Research. This growth is driven by factors such as 5G infrastructure investments, a rising number of mobile subscribers, increasing demand for high-speed data, and the growing need for managed services.
This industry has undergone a remarkable evolution since its inception. From early forms of communication like voice and basic visual signals transmitted over wired infrastructure, it has progressed to today’s sophisticated landscape of exchanging audio, video, and text content across diverse wireless networks. This evolution is marked by advancements in data speeds, transitioning from early technologies like GSM and CDMA to 3G, and 4G, and now the commercialization of 5G, enabling rapid data transfer that was once unimaginable.
According to Forbes, one of the driving forces for the telecom industry in 2025 will be the continued rollout and maturation of 5G technology. 5G will deliver faster speeds and improved connectivity and also unlock a new era of possibilities, such as enabling immersive experiences like VR/AR, powering advanced industrial applications, and driving innovation across a wide range of sectors.
While 5G is currently being deployed, attention is shifting to 6G, which promises to deliver significantly enhanced capabilities. IDTechEx recently reported that 6G will revolutionize communication by operating in the terahertz (THz) spectrum. This will enable unprecedented data rates (Tbps) and ultra-low latency. Beyond speed, 6G will unlock new applications like energy harvesting and advanced sensing. To achieve this, 6G will utilize higher frequency bands (7-20 GHz, W-band, D-band) for both access and backhaul. However, higher frequencies present challenges like atmospheric absorption and interference.
Overcoming these requires optimizing link budgets through advancements in semiconductor technology. While CMOS may suffice for lower frequencies, SiGe and InP technologies are crucial for higher frequencies. SiGe BiCMOS offers a good balance of performance and cost, while InP provides the highest performance. Furthermore, Antenna-in-Package (AiP) technology is vital for integrating antennas directly into semiconductor packages, crucial for high-frequency communication, particularly in the mmWave and sub-THz ranges.
With that, let’s take a look at the 12 best telecom stocks to invest in now.
Methodology
We sifted through the Finviz stock screener to compile an initial list of top telecom stocks to invest in. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Telecom Stocks To Invest In Now
12. Tim S.A. (NYSE:TIMB)
Number of Hedge Fund Holders: 16
Tim S.A. (NYSE:TIMB) is a telecommunications company that provides mobile voice, data, and broadband services in Brazil. It offers in-mobile, landline, long-distance, and data transmission services. Its customers include individuals as well as corporates.
Tim S.A. (NYSE:TIMB) reported robust Q3 2024 results that were led by the expansion of its B2B initiatives. The company was able to double its mobile ads and data monetization revenues over the past 12 months and made BRL 600 million in contracted revenues in the IT market. This development is crucial as the company navigates challenges in the prepaid market, including lower recharge frequencies among certain customer segments. This brings the focus to the postpaid customer base, which grew close to 8% year-over-year, to mitigate these challenges.
While Tim S.A. (NYSE:TIMB) faces competitive pressures from new market entrants like Nubank, the company remains confident in achieving 5-6% growth in 2025. This outlook is supported by continued expansion in its digital services and B2B segments, positioning the company for long-term success.
11. Telus Corp. (NYSE:TU)
Number of Hedge Fund Holders: 16
Telus Corp. (NYSE:TU) is a telecommunications and IT company. It operates in two main segments. One is Technology Solutions, which offers products and services like telecommunications, network services, healthcare, IT, data, and digital solutions for both businesses and consumers. The other is Digitally-Led Customer Experiences, which focuses on providing digital transformation solutions, such as AI and content management, to businesses.
The company reported strong third-quarter 2024 results and maintained industry-leading postpaid mobile phone churn rates below 1% for the eleventh consecutive year. At the same time, it achieved significant customer growth, adding 347,000 net customers, including 289,000 mobile subscribers and 34,000 internet subscribers. It builds customer loyalty with innovative product bundles, averaging over 3.2 products per household, and initiatives like TELUS SmartEnergy and TELUS HomeView.
To maintain profitability, Telus Corp. (NYSE:TU) strategically chooses not to match dilutive offers in the market, prioritizing long-term sustainability over short-term gains. Its customer-centric approach positions the company for continued growth.
10. BCE Inc. (NYSE:BCE)
Number of Hedge Fund Holders: 20
BCE Inc. (NYSE:BCE) is a communications company that provides a comprehensive suite of wireless, wireline, internet, and television services to residential, business, and wholesale customers. It operates through two primary segments. One is Bell Communication and Technology Services, which focuses on delivering telecommunications products and services. The other is Bell Media, which encompasses television, radio, and digital media properties.
In its third quarter of 2024, the company strengthened its B2B tech services capabilities through acquisitions like Stratejm, CloudKettle, and FX Innovation, fueling a 10% revenue increase in Business Solutions. Similarly, its acquisition of Out Edge Media boosted advertising revenue by 7.9%, marking the third consecutive quarter of growth.
The planned acquisition of Ziply Fiber for H2 2025 will be financed using money from the recent sale of a stake in Maple Leaf Sports & Entertainment (MLSE) and a special program that allows the company to buy back shares at a discount, keeping the company’s overall debt levels stable. Despite these positive developments, overall revenue declined by 2.66% as compared to Q3 2023. However, the company’s financial position remains strong with $4.4 billion in available liquidity and a well-structured debt maturity schedule.
9. United States Cellular Corp. (NYSE:USM)
Number of Hedge Fund Holders: 21
United States Cellular Corp. (NYSE:USM) is a leading provider of wireless telecommunications services in the US. It offers a comprehensive range of services, including voice, messaging, data, and a diverse portfolio of devices and accessories. It uses a multi-channel distribution network, including retail stores, direct sales, and online platforms, serving a broad customer base that includes consumers, businesses, and government entities.
The company is mirroring the success of industry leaders by monetizing a significant portion of its spectrum assets, including a recent $1.02 billion deal with AT&T. Spectrum assets are valuable licenses that allow companies to use specific portions of the electromagnetic spectrum for wireless communication, enabling them to provide services like cell phone calls and data. This divestment strategy also includes the sale of non-core businesses such as OneNeck IT solutions.
Furthermore, United States Cellular Corp. (NYSE:USM) demonstrates strong wireless performance with improved subscriber metrics, such as a 20,000 year-over-year reduction in retail net losses, and increased revenue per user driven by the successful promotion of higher-tier plans. This reflects a focus on customer satisfaction, aligning with long-term growth prospects.
8. Vodafone Group (NASDAQ:VOD)
Number of Hedge Fund Holders: 23
Vodafone Group (NASDAQ:VOD) is a UK-based telecommunications giant with services that include mobile and fixed connectivity, cloud solutions, IoT, cybersecurity, and digital applications. It serves a range of industries, from healthcare and finance to retail and agriculture.
The Vodafone Investments division is a newly established segment that plays a role in its restructuring efforts. Recently, it sold a further stake in Vantage Towers for ~$1.4 billion, facilitating a co-control structure. The company made several other investments, such as partnering with major tech firms like Microsoft and Google to enhance its digital services. Additionally, it invested $155 million in AST SpaceMobile to improve mobile connectivity technologies. These actions are expected to deliver positive results in the current FY2025 and support further acceleration into FY2026.
This division is designed to create a more agile and focused company. By leveraging partnerships, Vodafone Group (NASDAQ:VOD) aims to increase revenue and profitability while providing consistent returns to shareholders.
7. Lumen Technologies Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 26
Lumen Technologies Inc. (NYSE:LUMN) is a leading technology and communications provider that offers a range of services, including fiber, cloud, edge computing, security, and networking solutions to businesses and consumers worldwide. Operating through its Lumen, Quantum Fiber, and CenturyLink brands, the company delivers high-speed internet, voice services, and a suite of digital solutions.
The company is now prioritizing building the essential infrastructure for the growing AI sector to fuel the telecom business, which involves utilizing its existing fiber network infrastructure to connect data centers and support the massive data transfer needs of AI applications.
It’s actively securing large-scale private connectivity fiber (PCF) deals with major technology companies like Microsoft, Meta, AWS, and Google. These deals involve building dedicated fiber connections between data centers to facilitate high-bandwidth, low-latency data transfer. The company has recently secured over $3 billion in incremental PCF deals, bringing the total to over $8 billion since June.
Its strategy is based on the understanding that AI applications require vast amounts of data to be processed and analyzed. By positioning itself as a key enabler of the AI revolution, Lumen Technologies Inc. (NYSE:LUMN) aims to capitalize on the growth potential in this market.
Third Point Management stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2024 investor letter:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. First, Lumen Technologies, Inc. (NYSE:LUMN) announced that its Level 3 (LVLT) subsidiary was doing a fiber infrastructure build to support AI growth. Our aversion to secular decline (most of LUMN is melting copper infrastructure) kept us out of the situation but the AI fairy dust resulted in a massive rerating of LUMN debt and equity. These higher security prices in turn facilitated several moves to refinance portions of the capital structure and extend the runway.”
6. Cogent Communications Holdings Inc. (NASDAQ:CCOI)
Number of Hedge Fund Holders: 27
Cogent Communications Holdings Inc. (NASDAQ:CCOI) is a leading provider of high-speed internet, private network, and colocation services. It caters primarily to bandwidth-intensive businesses, including law firms, financial institutions, and other professional services, as well as other internet service providers. Its services include on-net and off-net internet access, private network solutions, and data center colocation space.
The earlier acquisition of Sprint Global Market’s wireline business by Cogent Communications Holdings Inc. (NASDAQ:CCOI) helped the company achieve $165 million in cost savings, representing 75% of the targeted $220 million in annual cost reductions, as of Q3 2024. The acquisition has expanded its network reach through the integration of 43 acquired Sprint facilities, increasing the total data center count to 95.
It also enabled the company to expand its service offerings to include optical wavelength services, which are now available in 200+ locations and are expected to expand to 800+ locations by the end of 2024. Cogent Communications Holdings Inc. (NASDAQ:CCOI) is well-positioned to capitalize on emerging market opportunities and solidify its position as a leading player in the telecom industry.
Alphyn Capital Management stated the following regarding Cogent Communications Holdings, Inc. (NASDAQ:CCOI) in its Q3 2024 investor letter:
“In its latest earnings release, Cogent Communications Holdings, Inc. (NASDAQ:CCOI) reported steady, albeit unspectacular, performance in its core operations. There has been some progress on extracting cost synergies from the Sprint acquisition, and there is some potential for value creation through monetizing “hidden assets” from its IPv4 and data center co-location fees. The company has made progress in realizing cost synergies from the spring acquisition and may unlock additional value by monetizing “hidden assets” such as its IPv4 holdings and data center co-location fees. However, the crux of the investment thesis remains the potential for significant revenue growth from waves. Without this catalyst, I believe the stock could drop to the low $60s, but with waves revenues materializing, the upside potential could exceed $150.
It is interesting to see what happened with Lumen, a competitor to Cogent, after announcing a $5 billion deal to build a custom network for Microsoft’s data centers on July 24th. The stock jumped from around $1.50 to approximately $7 per share. From my understanding and based on reading a short seller report,2 Lumen is primarily acting as a contractor in this deal, and it is estimated to retain only $800 million in one-time profits from construction and only $21 million in recurring profits.
In contrast, Cogent has the potential to generate over $500 million in recurring operating profits3 if it can successfully sell its wave revenues over the next few years. The capital expenditure is much more limited, as Cogent is connecting an existing infrastructure that all its customers can use instead of a bespoke construction for just one customer. While I don’t expect the same dramatic market reaction as Lumen’s, Lumen’s stock rally was partly due to relief from its potential bankruptcy risk as the influx of cash will help manage its substantial $18 billion debt; I do think this situation reflects the market’s appetite for companies providing infrastructure critical to AI and cloud development.”
5. Telephone and Data Systems Inc. (NYSE:TDS)
Number of Hedge Fund Holders: 31
Telephone and Data Systems Inc. (NYSE:TDS) is a telecommunications company operating in the US through its UScellular and TDS Telecom segments. UScellular focuses on wireless services, while TDS Telecom offers a variety of communication solutions for residential and business customers.
Its Telecom segment’s performance in Q3 2024 was driven by the addition of 32,000 new marketable fiber addresses, bringing the year-to-date total to 87,000 at the end of the quarter. This puts the company on track to achieve its annual goal of 125,000 new fiber addresses. This expansion translated into a 4% year-over-year growth in total residential broadband connections. Furthermore, residential revenues experienced a significant 5% increase during the quarter.
These results underscore the importance of the company’s fiber broadband initiative. This successful execution of the fiber strategy positions Telephone and Data Systems Inc. (NYSE:TDS) for continued growth.
4. Frontier Communications Parent Inc. (NASDAQ:FYBR)
Number of Hedge Fund Holders: 52
Frontier Communications Parent Inc. (NASDAQ:FYBR) provides a range of communication and technology services across the US, including broadband internet, video, voice, and data services. It serves a diverse customer base, including large enterprises, small and medium businesses, and wholesale customers. It offers a range of solutions, from basic internet access to advanced data networking and unified communications services.
The company’s third-quarter 2024 results were driven by the addition of 381,000 fiber passings, bringing the total number of locations passed with fiber to 7.6 million. It also added 108,000 fiber broadband customers during the quarter, resulting in a remarkable 19.3% year-over-year growth in fiber broadband subscribers.
This translated into a significant 21.8% year-over-year increase in consumer fiber broadband revenue, attributed to the addition of new fiber broadband subscribers and a slight increase in the average revenue per user to $65.40. By aggressively investing in its fiber network and attracting new fiber broadband subscribers, Frontier Communications Parent Inc. (NASDAQ:FYBR) is solidifying its position as a leading provider of high-speed internet services.
Cooper Investors Global Equities Fund (Hedged) stated the following regarding Frontier Communications Parent, Inc. (NASDAQ:FYBR) in its Q3 2024 investor letter:
“The largest contributors were Frontier Communications Parent, Inc. (NASDAQ:FYBR) and Eurofins Scientific (ERF)
Frontier is a US based broadband company converting its legacy copper network into future-proof fibre infrastructure. The completed network will produce highly resilient cash flows which we believe will be worth multiples of the company’s current market value. Frontier began its multi-billion dollar network upgrade in 2021 and is expected to complete the build in mid-2026, at which point cash flows will inflect positively.
During the quarter, leading US telco Verizon entered into an agreement to acquire Frontier for US$38.50 per share, circa 38% above the undisturbed price. The shares have settled at a price of circa US$35.50 reflecting the roughly 18-month approval process required to close the transaction. Despite this premium it is our view that the US$38.50 price is highly opportunistic, coming at a time when the risks of the network build (funding, costs) are decreasing in advance of the inflection in cash flows, which will persist for decades.
Frontier has one of the highest calibre management teams in global telecommunications and we have observed them execute their strategy over the three years accordingly, such that the standalone prospects and value of the company are not reflected in the offer price, let alone any synergies on offer via a combination with Verizon.”
3. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is a global provider of communication, technology, and entertainment services. Operating through its Consumer and Business segments, it offers a range of products and services, including wireless, wireline, FWA broadband, IoT solutions, and more. The company serves consumers, businesses, and government entities with a focus on delivering innovative and reliable solutions.
The company has demonstrated strong success in the fixed wireless access market, surpassing the initial target of 4-5 million subscribers 15 months ahead of schedule, as of Q3 2024. Verizon Communications Inc. (NYSE:VZ) plans to double its fixed wireless subscriber base to 8-9 million by 2028.
This goal will be achieved through a multi-pronged strategy that includes aggressive deployment of C-Band and millimeter wave technologies to enhance coverage and capacity, the introduction of innovative solutions to serve multi-dwelling units with high-speed internet, and continuous R&D investments.
Third Point Management stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its Q3 2024 investor letter:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
2. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 59
AT&T Inc. (NYSE:T) is a global leader in telecommunications and technology, offering services across two segments: Communications and Latin America. The Communications segment provides wireless, wireline, and broadband services to consumers and businesses in the US, while the Latin America segment focuses on wireless services in Mexico.
The company experienced robust growth in 5G subscribers during the third quarter, adding 403,000 postpaid phone net additions, which was achieved with a decrease in churn and upgrade rates. This performance translated into an increase in Mobility EBITDA, exceeding the full-year guidance by reaching a growth rate of over 6%. Mobility EBITDA grew by $600 million year-over-year, reaching $9.5 billion, driven by a 4% increase in Mobility service revenue.
This strong foundation sets the stage for continued success in the fourth quarter, with the anticipated seasonal factors expected to fuel growth further. AT&T Inc.’s (NYSE:T) focus on 5G subscriber growth is a key driver of its overall success.
1. T-Mobile US Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 66
T-Mobile US Inc. (NASDAQ:TMUS) is a leading mobile communications provider that offers voice, messaging, and data services across postpaid, prepaid, and wholesale channels. It provides devices like smartphones, wearables, and home broadband routers, and offers services like financing, insurance, and leasing through its T-Mobile and Metro by T-Mobile brands. It operates through its retail stores, online channels, and third-party distributors.
In terms of customer acquisition, the company saw that the digitalization of sales increased the total digital mix of iPhone launch sales by 40% year-over-year, with the majority of T-Mobile US Inc. (NASDAQ:TMUS) branded iPhone pre-orders being made online. In the broadband sector, it delivered industry-leading net additions, reaching 6 million customers within three years and making significant progress toward its target of 12 million by 2028. This growth was fueled by the company’s top-rated 5G network.
T-Mobile US Inc. (NASDAQ:TMUS) raised its full-year guidance, expecting total postpaid customer net additions to be between 5.6 million and 5.8 million, with ~3 million postpaid phone customer net additions anticipated. These results illustrate its capacity for profitable growth and position the company for continued success.
While we acknowledge the growth potential of T-Mobile Us Inc. (NASDAQ:TMUS), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TMUS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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