Next year could be a pivotal one for telecom stocks with the race for 5G heating up and consumers having even more content options. Two telecom stocks that are right in the thick of that battle are AT&T (T -0.67%) and T-Mobile US (TMUS -0.40%). While both companies have seen their shares perform well this year, rising more than 25% since January, that may not be the case in 2020.

Let's take a closer look at these two stocks to see which one of them is a better buy heading into next year.

Battle for content is heating up

With Time Warner now firmly in its arsenal, AT&T is looking to capitalize on this significant opportunity by launching HBO Max. The service, which will cost up to $17 a month for premium content, could help the company attract cord-cutters. A content-rich HBO package could be an intriguing option right now, as Netflix loses content and subscribers decide which service(s) they want to keep.

User making a selection on a remote aimed at a TV


T-Mobile is also making a move, albeit a slightly different and more expensive one with the launch of its TVision package that will come in at $100/month. While it may be competitive in comparison with other cable packages, it may not be a popular option for those looking to cut their costs.

5G could be another big battleground

Having the fastest network is something every big telecom provider strives for, and that's why the race to 5G could have big implications for which of these two companies will dominate next year.

The rollout already started for AT&T in late 2018 and as of this April, there were 19 cities with access to the company's 5G network. It won't be until next year, however, that AT&T says the network will be more widely available across the country.

For T-Mobile, the picture is a bit less clear since there's a big question mark over its merger with Sprint which, after a year and a half, is still awaiting the necessary approvals. The two companies are working on a concerted effort to build out their 5G networks but if the deal falls through, it could set back the progress made by what's often dubbed the "New T-Mobile." But if all goes according to plan, the new company expects to have a "broad and deep nationwide 5G network to market quickly in the first years of the 5G innovation cycle." T-Mobile could also offer more competitive pricing on 5G than its peers.

Winner: AT&T

Both AT&T and T-Mobile will be key players when it comes to 5G, but the uncertainty surrounding the Sprint and T-Mobile merger gives AT&T a slight edge. And with AT&T looking to generate some significant growth from the launch of HBO Max, it could be shaping up to be a great year. Another advantage for AT&T investors is that the stock pays a dividend of 5.5%, which could further strengthen the stock's returns.

Even from a value perspective, AT&T's price-to-earnings multiple of 16 falls well below the 21 times earnings that T-Mobile currently trades at. With less risk, some great opportunities to grow and an impressive dividend, AT&T is the clear winner today.