13 Best Telecom Stocks to Buy According to Hedge Funds

3. Verizon Communications Inc. (NYSE:VZ)

Number of Hedge Fund Holders: 74

Verizon Communications Inc. (NYSE:VZ) is a telecom leader that provides wireless and wireline services to consumers, businesses, and government entities. Operating through its Consumer and Business segments, it delivers advanced mobile connectivity, fiber-optic broadband, and enterprise solutions, which include IoT and security services.

In 2024, the company achieved a 3.1% year-over-year increase in wireless service revenue and added nearly 2.5 million postpaid mobility and broadband subscribers. Postpaid phone net additions reached nearly 900,000 for the year, with positive contributions from both consumer and business segments. In broadband, the company added nearly 1.6 million subscribers. This was driven largely by fixed wireless access (FWA), which now boasts over 4.6 million subscribers and generated $2.1 billion in revenue. The company is targeting 8 to 9 million FWA subscribers by 2028.

Through its Verizon AI Connect initiative, the company is using its extensive fiber and edge compute assets to provide high-capacity connectivity and computing solutions for AI applications. It’s collaborating with industry leaders like NVIDIA and Vultr with already secured customer contracts that indicate significant potential for this new business segment.

Third Point Management views the company’s acquisition of Frontier positively, as it has driven a beneficial revaluation of fiber networks and highlights the strategic value of high-end fiber infrastructure. It 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.”