Investors in the telephone or cable industries have had a tumultuous year -- unless they've picked a very small handful of winners. Telecom giants AT&T (NYSE: T) and Verizon (NYSE: VZ) have been hit hard by low-priced upstart T-Mobile (NASDAQ:TMUS) and are now in the midst of a vicious pricing war despite the existence of only four national carriers.

Cable companies have been able to grow with increased broadband use, but those with large media arms have been hit by the cord-cutting phenomenon resulting from the rise of streaming services.

Given these headwinds, most of the industry is looking hard at acquisitions to expand capabilities and lower costs. Now that a certain milestone has passed, the time for acquisitions may be now. Let's look at who may be flirting with whom.

Executives sit around a conference table in board meeting

Image source: Getty Images.

Quiet period over

The end of March marked the end of a multistage wireless-spectrum auction. Wireless companies agreed to pay $19.77 billion for 70 Mhz of spectrum that television broadcasters sold for around $10 billion. The government -- which pocketed the spread -- compelled broadcasters to sell, since wireless had the need and many people now receive their broadcast channels by cable or satellite. 

This spectrum auction was a long process, and during the bidding period, telecom and cable companies weren't allowed to speak with each other about bidding strategies, mergers, and acquisitions. Now that it's over, telecom companies can talk to each other about hooking up.

T-Mobile, DISH, and Sprint

The company in the catbird seat is T-Mobile. It's earned a reputation as a low-cost disrupter in the space, and its stock has increased 60% in the past year.

T-Mobile and Sprint (NYSE:S) tried to merge in the recent past, but the Obama administration preferred to keep the number of wireless-carrier choices at four instead of three. Now that the more business-friendly Trump administration is in power and FCC Chairman Ajit Pai is in charge, the common wisdom is that more mergers will be allowed.

On the recent quarterly earnings call, T-Mobile CEO John Legere pointed to M&A as a potential benefit to both T-Mobile's own business and its customer, but reiterated that the company didn't need to do something: "[F]irst of all, we should be clear that there are strategic possibilities between wireless companies, cable players, adjacent industries, Amazon, internet players that should be thought about, because they drive great value for shareholders and also new opportunities for customers. So there definitely are some things that are intuitively obvious." [Transcript via Seeking Alpha.]

Legere specifically pointed to Sprint as having "an awful lot of scale and a good customer base," and to DISH Network as having "access to good content and spectrum."

DISH, for its part, has been amassing a collection of spectrum that it will have to use by 2020 or face penalties. The company said it's planning to build an Internet of Things network with its spectrum, but it's still in the early planning stage. Since the company's main business of satellite cable is declining, it may be a better option to get acquired.

Sprint's parent company recently indicated Sprint is open to a merger with T-Mobile or some other deal with another partner.

Cable companies

At the same time, Comcast announced plans to sell its own wireless plans on Verizon's networks, so it's possible those companies may look to merge. That would be a blockbuster, but if AT&T's merger with Time Warner (NYSE: TWX) goes through, why not? Charter Communications is also planning a wireless partnership with Verizon and speculation has swirled about a tie-up. The bigger the deal, the more difficult it would be to get through the FCC, even a business-friendly one.

Wireless spectrum holders

Finally, there are small companies with spectrum assets. Given the recent bidding war for Straight Path Communications, these companies may also be targets going forward. One is Globalstar, and its spectrum that works well with small cells, which helps with densification, or serving places with lots of people. There is also private Ligado Networks, which is building a network geared toward the Industrial Internet of Things for transportation fields. Given Verizon's purchase of Fleetmatics, which provides fleet-management software, in 2016, that may be an interesting combination as well.

Stay tuned 

Much of this is speculation, and investors shouldn't buy a stock just because they think it will get acquired. However, investors interested in the space should watch closely, because whatever happens, the telecom industry is likely to look much different in a few years. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.