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Investing.com -- Goldman Sachs initiated coverage of U.S. telecom and cable operators, describing 2026 as a pivotal year for the industry as competition in consumer connectivity intensifies, shifting away from handset promotions toward convergence, network modernization, and bundled offerings.
AT&T (NYSE:T), T-Mobile (NASDAQ:TMUS), and Verizon Communications (NYSE:VZ) were started with Buy ratings. Goldman analysts said their positive stance reflects investments that should deliver “industry-leading EBITDA growth, free cash flow conversion, and shareholder capital returns.”
AT&T, rated Buy with a $32 target, is expected to realize a 9% free cash flow CAGR through 2029, enabling accelerating buybacks under a $40 billion capital return program.
Fiber deployments are set to ramp to 4 million passings annually by 2026, positioning the company to meet its 60 million homes target by 2030.
T-Mobile was assigned a $286 target and is seen generating the highest free cash flow conversion among peers, with $20 billion of shareholder returns projected for 2026.
Analysts noted the carrier should remain the industry leader in postpaid phone additions and expand its broadband presence through both fixed wireless and fiber partnerships, although its premium valuation reflects much of the growth already.
Verizon, rated Buy at $49, was described as an “out-of-consensus” call. The analysts pointed to upside from waning promotional headwinds, growth in its Perks marketplace, and potential cost and revenue synergies from the proposed Frontier acquisition.
Those moves could pave the way for share repurchases for the first time since 2015.
In contrast, Charter Communications (NASDAQ:CHTR) and Altice USA (NYSE:ATUS) were both initiated at Sell. Charter Communications (NASDAQ:CHTR), with a $223 target, faces broadband pressure from fiber and fixed wireless competition.
While efforts such as bundling ad-supported streaming apps may aid average revenue per user (ARPU), analysts led by Michael Ng still forecast subscriber losses and limited pricing power.
Altice, rated Sell with a $2 target, has not seen positive broadband growth since 2020 and trades at a valuation premium despite what Goldman called “fundamental headwinds and leverage.”
Cogent Communications (NASDAQ:CCOI) and Lumen Technologies (NYSE:LUMN) were rated Neutral, while Frontier Communications (NASDAQ:FYBR) was not rated.
Overall, Goldman analysts believe telcos are best placed to gain ground with fiber buildouts and convergence strategies, while cable operators remain under pressure from both wireless and fiber alternatives.