Federal Judge Accelerates U.S. 5G Rollout
And this stock is soaring on the news…
Earlier this week, reports surfaced that U.S. District Judge Victor Marrero decided to approve the merger between Sprint and T-Mobile. After two years of wading through regulatory red tape and political grandstanding, the two companies could finally tie the knot.
Shares of beleaguered Sprint shot up 60% on Tuesday in pre-market trading and closed the day up 78%. T-Mobile, the stronger of the pair, got a 12% bump in response to the announcement. And the U.S. got a lot closer to a nationwide 5G network.
But as I type this, shares of Sprint and T-Mobile have calmed down. They’re still on the rise but only by a couple percent. It’s another company's share price that's screaming up on the news now. And it’s one that many investors don’t relate to 5G at all — despite its network being crucial to 5G deployment.
I’ll tell you all about that company later in the article but, first, let me explain why the merger between Sprint and T-Mobile is going to accelerate the 5G rollout…
More Than the Sum
In math, the result of an equation is determined by the variables in that equation. One plus one always equals two. It’s something I loved about the subject in school. The grades on my papers were subjective. Maybe my opinion was right and the teacher’s opinion was wrong. Maybe William Faulkner isn’t prolific. But the grades on math tests weren't debatable. There’s only one answer in math. If you get something else, you did it wrong.
Then I got into finance and economics, which are both very math-heavy fields of study. I had to take a lot of the same calculus courses as the engineering students. But as I got further along in my education and my career, I found that financial math isn’t quite the same.
Sometimes one plus one doesn’t equal two. Sometimes the result of a combination is worth far more than just the sum of its parts. And that’s the case with the combination of Sprint and T-Mobile.
Thanks to a technological innovation called “carrier aggregation,” combining the two networks won’t just add them together. It will multiply the combined networks' capacity. It’s actually what led to the idea for the merger in the first place.
You see, Sprint was saddled with tons of debt and had been bleeding customers for years, but it was sitting on valuable and underutilized mid-band spectrum. And T-Mobile had been growing after being turned around by then CEO John Legere. So, its low-band and high-band waves were starting to get crowded with customers and overloaded.
The combination was a match made in heaven. T-Mobile would get the underutilized mid-band to keep expanding, and Sprint would get out from under its debt and in with a company growing customers instead of hemorrhaging them.
As Legere put it, “Combining could provide better coverage at lower costs to more customers.”
And even the threat of that combined company and network had already caused AT&T and Verizon to expand their 5G offerings. Now that it’s a reality, everyone is going to be sprinting towards the finish line, racing to be the first and the best.
But the thing is that none of these companies can deploy a nationwide 5G network on its own. They all need the existing network and infrastructure assets owned by a small company you’ve probably never heard of.
The Nationwide Network
5G is different from 4G in that the waves are very small. That means they can be packed with more data and can travel faster. But it also limits how far they can go before they die off. 4G waves can travel miles. That’s why they can rely on massive antenna towers strategically located across the country.
But 5G waves can only go a matter of yards before they’re too weak to pick up. So, the new network will have to rely on much smaller antennas mounted much closer to where people are using their devices.
Another difference between 4G and 5G is the sheer amount of data that can be transmitted. Because there will be so much data on these new networks, the carriers need to be able to store it somewhere. And that also has to be close to where the customers are so that it can be accessed instantly.
Data storage centers near major metro areas will be the warehouses for all this information. But those aren’t connected to any wireless networks; they’re connected with fiber-optic cables.
And it’s those cables that are crucial to the development of a nationwide 5G network. First, they’re the only way to connect the wireless network to the wired data centers. And second, they’re also the best place to mount the millions of antennas that will be needed for full-coverage 5G.
And that’s where this company that’s shooting up the charts comes into play. It’s got the biggest fiber network in the country — more than any of its competitors or any of the wireless carriers, even the newly combined Sprint/T-Mobile. In fact, it’s got more by itself than the next 10 companies combined.
And it’s already charging all of the carriers and thousands of other customers a toll to get on its network.
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The 5G Tollbooth
Since this firm already has an extensive nationwide fiber network that’s already up and running, and that network is going to be the lifeblood of 5G, all four (soon to be three) wireless carriers have multimillion-dollar deals that allow them to get access to the network.
And if you need proof of how instrumental this network is to their 5G plans, just take a look at the only cities in the country where you can get 5G coverage right now:
Source: Verizon, AT&T, Sprint, T-Mobile quarterly reports
Every single one of them is also on this company’s fiber network:
Source: “5G Tollbooth” Investor Presentation
The only places in the entire country that have 5G right now only have it because of this company’s extensive fiber network. So, you can understand why every company hoping to profit from 5G is desperate to get on this company’s network.
And this company is content to let them use its infrastructure as the backbone for their 5G networks in exchange for a small fee every time they use it — like charging a toll to get on an expressway.
Billions in 5G Profits Up for Grabs
And those little tolls add up to serious money. Over the last 12 months, they’ve added over $700 million. And there really wasn’t much progress on 5G until late in 2019. By the end of 2020, as the carriers sprint it out towards the finish line, those tolls are expected to total more than $1 BILLION.
And because so few investors know anything about this company at all, let alone its importance for nationwide 5G, the stock has been trading well below its future value. That means there’s still time for you to get in before the really big gains come.
How big? Well, this company’s network is so crucial to the development and successful deployment of a nationwide 5G network that its shares could easily shoot up from under $10 (where it is today) to $68 or higher by the end of the year. That’s a 656% gain.
And that could be just the start. There’s little reason this company couldn’t be another 1,000% 5G winner before all is said and done.
But if that all wasn’t good enough, it’s about to get even better. This company knew it would be at the crux of a pivotal moment in history. And so it set up a special agreement with the U.S. government to get it better positioned for the growth to come.
But one stipulation of that deal is that the company has to pay out the majority of its profits to shareholders. It can do it evenly throughout the year or at the end in one big lump sum. But it has to pay them one way or another or it loses its deal with the government.
So, not only is there the potential for 600%, perhaps even 1,000%, gains, but you also get paid while you watch your shares race higher as the carriers race towards 5G coverage.
Act Now or Miss Out
But that kind of opportunity creates a problem for investors. Things like this don’t come around very often. And people are always on the lookout for the next big winner. So, when something like this shows up, it never lasts for long.
Analysts start trumpeting buy recommendations and boosting price targets. Institutions buy up big blocks of shares, and then retail investors come in for the last part of the rally and miss out on all the big gains.
It’s only the investors who find the opportunities before the crowd that make the life changing, retire early, flip off your boss kind of money. Right now, this is still one of those early opportunities. Shares are still low — volume is, too. Nobody is talking about the company on Wall Street, yet.
But that’s all starting to change as I type. Shares are up nearly 20% in just the past few days. Investors are starting to catch on. And soon, the massive gains will be out of reach and in someone else’s portfolio.
You need to get invested before shares head any higher. So, before you do anything else, check out this presentation detailing the opportunity. You can learn everything you need to know to get involved and be watching your gains add up in less than an hour.
If you’re at work and can’t watch a video right now, take a few minutes to review this report about the opportunity instead. It’s got all the same details and you can sneak it in between meetings.
Either way you get the information, you can be sitting back relaxing in less than an hour, knowing you’ve set yourself up to get the lion’s share of these 5G gains.
To your wealth,
After graduating Cum Laude in finance and economics, Jason analyzed complex projects and budgets for the U.S. Army. Then, at Morgan Stanley, he led the assistants' team for the North American repo sales desk, responsible for hundreds of multibillion-dollar trades every day. Jason is an editor for The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.
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