Better Buy: Frontier Communications (FTR) vs. T-Mobile (TMUS)

Better Buy: Frontier Communications (FTR) vs. T-Mobile (TMUS)

Posted On September 24, 2018 2:26 pm

In some cases, something you don’t really want becomes a value if the price gets low enough. That explains some fast-food value menus, and it contributes to the appeal of dollar stores.

But there are other items — think Miami Marlins tickets or a bottle of Mountain Dew — that you don’t want no matter the price. Something you don’t want doesn’t become a deal because it’s cheap. It becomes a burden you’re stuck with, like an ugly painting you have to hang up every time the aunt who gave it to you visits.

In my view, Frontier Communications (NASDAQ:FTR) is all of those terrible things. Yes, it’s cheap, but that should not tempt investors. Buying a stock at a low price makes sense if there’s a reasonable expectation it will rise. Frontier seems like a deal compared with high-flying T-Mobile (NASDAQ:TMUS), but as I see it, that’s like saying a broken-down scooter is a good deal compared with a new Porsche.

Is the difference really that big?

T-Mobile operates in a very competitive market, and it faces regulatory scrutiny in its attempt to buy Sprint (NYSE:S). That deal could very well be scuttled by federal regulators. And while that seems like a red flag, it would really just be a bump in the company’s road to success.

Adding Sprint would make things easier for T-Mobile. It would give the company more customers and more resources to build out its 5G network faster. If the deal gets denied, however, T-Mobile will be just fine.

The company has added over 1 million subscribers in every quarter for the past four years, and has led the industry in phone activations for 18 straight quarters…

Continue reading at THE MOTLEY FOOL

About author

Leave a reply

Your email address will not be published. Required fields are marked *