What's Wrong With Verizon Communications Inc. and AT&T Inc. Today?

AT&T and Verizon lagged their Dow peers on Wednesday. Once again, smaller rival T-Mobile is stealing the telecom giants' thunder.

Apr 9, 2014 at 2:00PM

John Legere Un Carrier Event
John Legere, CEO of T-Mobile, sure brings some color to the American telecom industry. Image source: T-Mobile.

Once again, the big telecoms are lagging behind their Dow Jones Industrial Average (DJINDICES:^DJI) peers. AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) were the blue-chip index's two worst performers in afternoon trading. Each of these stocks got at least a 1% haircut while the Dow soldiered on to a 0.5% overall gain. And like so many times before, investors are worried about what smaller sector rival T-Mobile (NASDAQ:TMUS) is doing.


This time, T-Mobile launched a $40 "starter plan" for cost-conscious phone buyers. The plan take effect on Saturday with unlimited voice and texting, and includes 500 megabytes of 4G LTE data networking. The company promises not to charge data overage fees, but data access will simply stop when you hit the half-gigabyte threshold.  You're free to buy additional data access at that point -- or just leave it blocked until the next billing cycle starts. There aren't automatic overage fees.

T-Mobile CEO John Legere posted a message to go with the announcement. In it, he gleefully attacked the "arrogant, out-of-touch US wireless industry" and all its faults. In particular, he giggled at the way the "big, fat, old-guard carriers" like to copy T-Mobile's so-called un-carrier moves, but with fleeting time limits or other restrictions on the consumer-friendly reforms.

Vz Phone Booth

Verizon's business model is getting outdated, according to Legere.

The direct jabs at Verizon and AT&T are hardly even masked. In fact, Legere stabbed openly at AT&T, noting that its overage charges can add 44% to your monthly bill and noting that AT&T's rapid upgrade program makes you pay twice for a handset.

If the starter plan doesn't seem substantial enough to support more than a 1% discount on both of the telecom giants, Legere also said that it's only the first of "three days of Un-carrier announcements for consumers."

So keep an eye out for more news out of T-Mobile this week. The self-described un-carrier may move the Dow again, without ever having a seat at that exclusive table.

That's how T-Mobile shares jumped 0.2% higher while taking Verizon and AT&T down a notch. On a larger scale, Legere's company has absolutely crushed the big telecoms and the Dow over the last year, as the un-carrier program unfolded.

Will the victory march continue? Hard to say, but at the very least T-Mobile is forcing AT&T and Verizon to take a long, hard look at their business practices. The big winner here is the American consumer, with or without T-Mobile subscriptions.

VZ Chart

VZ data by YCharts.

Editor's note: An earlier version of this article said that data access would fall back to a slower standard after hitting the 500-megabyte limit. That's how many other T-Mobile plans work, but not the Simple Starter. The Fool regrets the error.

The biggest thing to come out of Silicon Valley in years
If you thought that smartphones and tablets were amazing, just wait until you see this. One hundred of Cupertino's finest engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... and with a massive discount, at that. Click here to get the full story in this eye-opening new report.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers