U.S. telco shares fall on 5G network reports despite skepticism

(Reuters) - Shares in the biggest U.S. communications companies slipped on Monday after reports President Donald Trump's national security team is considering building its own 5G high-speed wireless network.

While investors fled, regulators and analysts scorned the proposal, which is being considered as a way to counter the threat of China spying on U.S. phone calls, according to U.S. media reports.

Shares in wireless providers Verizon Communications, AT&T Inc, Sprint Corp and T-Mobile US fell more 1 percent before paring losses. Even Comcast Corp, a provider of cable television and landline internet services, was last down 1.4 percent. Charter Communications was down 0.8 percent.

But Moffett Nathanson analyst Craig Moffett said Monday's dip was a buying opportunity for telecom stocks.

"The story is utterly ridiculous. Investors shouldn't spend three seconds worrying that this has even the remotest chance of becoming a national policy," said Moffett, adding that it was economically and politically infeasible and has no legal basis.

Moffett said the only real thing that will come of the plan is a continuation of efforts to prohibit equipment from China's Huawei.

This month AT&T had to scrap a plan to sell Huawei phones. In 2012 the United States probed whether Chinese network gear provided an opportunity for foreign espionage.

JPMorgan analyst Philip Cusick said construction would likely take longer than three years and that the idea of a national 5G network "seems to be in preliminary stages, and likely won't go any further."

Even the top U.S. telecommunications regulators said they were against the idea. The Federal Communications Commission chairman said he would oppose such a move, calling it "costly and counterproductive." Another FCC commissioner Michael O'Reilly called the proposal "nonsensical."

Cusick said there are other ways the U.S. government could help bolster U.S. network development.

"In our view the best thing the government could do to get 5G networks up faster would be to allocate more spectrum to them," for commercial operators looking to upgrade their networks, Cusick said.

But New Street Research analyst Blair Levin gave the idea some credence saying "the existence of the plan means that all investments in incumbent ISPs (internet service providers) are a bet on whether, how and to what extent, the plan succeeds."

AT&T shares were last down 0.7 percent. Verizon was down 0.8 percent. Sprint was down 0.8 percent. T-Mobile was down 1.1 percent. In comparison the S&P 500 fell 0.3 percent.

(Reporting by Sinead Carew; Editing by Tom Brown)