Verizon Communications Inc. (VZ) Positioned for 4G Explosion

Verizon isn’t just the biggest 4G network carrier, either — it’s also the best. According to a couple of recent user tests, one conducted by Consumer Reports and the other by laptopmag.com, Verizon handily beat AT&T and Sprint in speed, throughput, and file download times.

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At $189 billion in market cap, AT&T remains the biggest carrier, by a wide margin. With a tidy $20 billion from Softbank, including $8 billion added to its balance sheet, Sprint hopes to once again become a relevant player. But irrespective of AT&T’s size, or Sprint’s newfound financial stability, there’s only one game that really matters in wireless, and that’s 4G LTE.

With trailing earnings ratios around 40, both Verizon and AT&T are priced similarly, and each pays shareholders about a 5% dividend yield. Sprint needs to generate actual earnings before accurate comparisons can be made, and Softbank is certainly hoping that’s sooner rather than later. But for now, it boils down to Verizon or AT&T. So what’s an investor to do?

As a rule, telecom is a highly leveraged industry, as AT&T’s $60 billion in long-term debt, and Verizon’s $46 billion, will attest. Borrowing is often done to purchase assets — spectrum, towers, and the like — so measuring the return on those investments is huge in telecom, and Verizon absolutely obliterates its competition in these key areas. The company’s return on assets and return on investment metrics are three and four times better than AT&T’s, respectively.

The financials are good, but for investors the numbers pale in comparison to where Verizon really shines: 4G.

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The article Verizon Positioned for 4G Explosion originally appeared on Fool.com.

Fool contributor Tim Brugger has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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