In a reversal to their earlier decision, AT&T and Verizon announced last night that they would delay their 5G rollout. In deference to the requests of the FAA (Federal Aviation Administration), the telecommunications companies will add two weeks to the month-long delay to which they had already agreed. The delay will give the FAA the time it needs to manage its concerns about wireless safety around airports.
Before yesterday’s concession was made, the FAA had been considering restricting airplane landings in bad weather, in an effort to mitigate the 5G-related interference in cockpits. In response to the potential restrictions, U.S. airlines, worried about major disruptions to their flights, had planned to try and block the 5G rollout in federal court. Eventually, the telecommunications companies bent to pressure from Airlines for America, which represents the larger cargo and passenger carriers.
Airline Industry
The airline industry has been coming back very slowly, in this post-corona- lockdown, Omicron wave. None of the major airlines have Strong Buy analyst ratings, according to TipRanks’ average analyst consensus. United Airlines (UAL) does show a small year-over-year gain of 5.16%, and American Airlines (AAL) shows an 11.76% year-over-year gain, but earned a Hold rating from analysts. Given the serious strain on the airlines since the outset of the COVID-19 pandemic, it is not surprising that they would block any initiatives that would further restrict their business.
Telecommunications Industry
Verizon (VZ) and AT&T (T), for their part, are in need of a boost as well. AT&T has fallen 6.6% year-over-year, and it has a Moderate Buy analyst rating consensus. At the same time, AT&T earnings did beat estimates for the past four quarters.
Verizon also has conflicting statistics. The stock has fallen 6.4% year-over-year, and has a Hold analyst consensus. On the other hand, Verizon, too, showed an earnings beat for the past four quarters.
Verizon spent upwards of $45 million on wireless licenses, and more to prevent interference from satellite operators in cellphone towers, so it is doubtless eager to implement the 5G rollout. Nevertheless, the company has agreed to wait another two weeks to make their big move. If the 5G makes the impact that Verizon is hoping for, now might be a good time for investors to consider its stock.
