T-Mobile, Crown Castle, American Tower, AT&T, Frontier Are Deutsche Bank's Favs In Telecom

Deutsche Bank's Matthew Niknam initiated coverage on the US Telecom Services sector Tuesday in an afternoon research note.

The analyst pointed to a "challenging growth trajectory" for the sector over the near term, even amid the sector's defensive nature and "healthy" dividend yields. Niknam cited "competition from both internal (Wireless) and external (Cable) industry sources" related to this trajectory.

"While it’s difficult to like the space on this theme, we do see select pockets of opportunity," Niknam said.

The Deutsche Bank analyst's top three growth picks within the group are T-Mobile US Inc (NASDAQ: TMUS), Crown Castle International Corp (NYSE: CCI) and American Tower Corp (NYSE: AMT).

T-Mobile was highlighted as the top pick, boasting "best-in-class growth, margin/FCF expansion, and strategic appeal to potential industry partner," according to Niknam.

AT&T Inc. (NYSE: T) and Frontier Communications Corp (NASDAQ: FTR) are viewed as two key beneficiaries of "scale-related cost efficiencies as a means of preserving/improving profitability" by Niknam.