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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
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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

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