On December 14 the U.S. Federal Communications Commission voted to repeal net neutrality, as anticipated. There was significant popular backlash as well as vocal opposition from many large U.S. tech companies like Facebook Inc. and Netflix, Inc. However, the move opens up avenues for large U.S. telecommunications companies to profit significantly.
Shares of AT&T Inc. (NYSE:T) have climbed 4.5% week over week as of early afternoon trading on December 19. A day before the net neutrality vote, AT&T announced trials of its Project AirGig. The technology aims to provide Internet service over power lines that could deliver Internet speed of over 1 gigabit per second.
The decline of traditional mediums like radio and television has capped growth in some areas for telecom companies. Internet and wireless growth have been the primary revenue drivers in recent quarters. AT&T offers a dividend of $0.50 per share with a 5.2% dividend yield at offering.
Verizon Communications Inc. (NYSE:VZ) is up 3.9% week over week. Verizon released its third quarter results on October 19. The company reported net additions of 603,000 and over 480,000 smartphone additions, which beat analyst expectations. It also posted revenue of $31.72 billion compared to $30.94 billion in the prior year.
Verizon stock boasts a dividend of $0.59 per share representing a 4.4% dividend yield. Investors should be scooping up ISPs in anticipation of this rollback. A gigantic corporate tax reduction from 35% to 21% should also serve to boost earnings significantly in the New Year.
