Between the rollout of next-generation 5G services and major M&A moves, analysts this earnings season will be looking for updates from all four top U.S. wireless operators on their efforts to position themselves for the future.

Verizon Communications Inc. kicks off earnings season for the telecom sector before the market opens Oct. 23. AT&T Inc. will not be far behind, set to report a day later. The two largest operators are pursuing divergent strategies when it comes to future growth.

Verizon's cost cutting

Verizon is keenly focused on cutting costs and deploying fiber in anticipation of the transition to 5G. In line with that, it launched fixed wireless 5G home broadband service in a handful of markets Oct. 1.

Jeffrey Kvaal, an analyst with Nomura's Instinet, expects Verizon to beat consensus estimates in terms of its net postpaid phone subscriber additions. Specifically, he expects the company to report 200,000 postpaid subscriber additions for the third quarter versus consensus estimates of 150,000, though he noted that Verizon also likely experienced higher churn due to "modest competition" from T-Mobile US Inc.

In the third quarter a year ago, Verizon reported net phone additions of 274,000.

AT&T's M&A story

As for AT&T, MoffettNathanson analyst Craig Moffett is bearish on the company, believing the company's M&A strategy has saddled the resulting entity with too much debt.

"In acquiring first DirecTV and now Time Warner, the company has spent more than [$170 billion], including assumed debt, to create what management now refers to as the first 'modern media company,'" Moffett wrote in a recent research report, adding that the company is now focusing on near-term free cash flow in order to pacify the debt markets.

In making this choice, the company may sacrifice video or wireless subscriber growth, or reduce capital spending "at a time when competitors — most obviously Verizon — are spending more on their networks," Moffett said.

But Oppenheimer analyst Timothy Horan is more bullish on AT&T, saying it represents a good bet for "investors looking for more safety into year-end."

5G investments

Horan also expects 5G wireless to be "the dominant investment theme in communications in the next few years."

While Verizon launched its 5G home broadband service in parts of Houston, Indianapolis, Los Angeles and Sacramento, Calif., on Oct. 1, AT&T this month reiterated its commitment to bring mobile 5G to 12 cities this year. At the same time, the company has been expanding the number of what it calls "5G Evolution" markets, where it can deliver peak theoretical wireless speeds for capable devices of at least 400 megabits per second.

Speaking of 5G at an investor conference in September, AT&T CEO Randall Stephenson said, "Everybody is on a race." He acknowledged that the race would not be won this year but rather that rollouts would occur throughout 2019 and real scale would happen in 2020. On the 5G front, AT&T is prioritizing mobile services over fixed wireless.

While Horan is positive on 5G wireless, Kvaal said Verizon's focus on 5G fixed wireless for broadband could enable it in the long run to challenge cable companies.

"We expect Verizon to improve and expand its fixed wireless offering over the next several years based on the learnings from these trials," Kvaal said, noting that he expects Verizon to deploy the service to the 50 markets by late 2019 and then possibly nationwide by the end of 2020.

T-Mobile/Sprint merger

As for T-Mobile and Sprint Corp., analysts will be looking for updates on their planned merger. The regulatory review of the deal is progressing, with the U.S. Federal Communications Commission having recently named David Sibley, an economics professor at the University of Austin, as the outside economic consultant for the FCC task force leading the agency's review of the transaction.

Bloomberg News reported this month that the FCC sent letters to a number of cable operators asking for information about the mobile offerings. Comcast Corp. and Charter Communications Inc. have both launched their own services — Xfinity Mobile and Spectrum Mobile, respectively — through mobile virtual network operator agreements with Verizon. Altice USA Inc. has announced plans to launch a similar service through its own agreement with Sprint.

Amy Yong, an analyst with Macquarie, told Bloomberg the inquiries were "a positive sign" for the T-Mobile-Sprint deal as they could indicate that the FCC is looking at potential competition in the wireless market more broadly.

Outside of the pending transaction, analysts will also be looking for information from T-Mobile on its plans for the new TV service it promised after buying video distributor Layer3 TV Inc.

"We expect TMUS to have a soft launch of its Layer3 [over-the-top] video service in November," Horan said.