By George Glover

Wireless companies have a Donald Trump problem -- and no, it's not his criticism of AT&T's services.

Trump knocked AT&T this past week for technical issues in a conference call, but AT&T took it in stride -- shares have gained 2.7% this week. And that's just a continuation of this year's strength in telecom stocks. AT&T shares have jumped 27% this year, and Verizon Communications has risen 9.2%, with traders betting that they'd prove well-insulated from sweeping levies.

The logic was that most of the operators' customers are based in the U.S., so higher import duties would have a limited impact on their bottom lines. The stocks' status as two of Wall Street's highest dividend payers can't have hurt their safe-haven appeal, either. Even T-Mobile US has gotten into the act with a 9.4% gain in 2025.

But the Trump administration's deportation drive could end up being a significant headwind. It's expected to drag down the number of legal and illegal immigrants crossing the border, which is all but certain to take a big chunk out of the telecom industry's total addressable market.

Wireless industry subscriber numbers have climbed by 6.6 million a year since the start of 2022, and net immigration has likely been the equivalent of nearly a third of those additions, according to estimates by MoffettNathanson, a research boutique focused on technology, media, and telecom. So it stands to reason that a drop in immigration will drag down customer growth.

"Tighter borders will almost certainly translate to weaker subscriber numbers, and the market always looks at those first," MoffettNathanson analyst Craig Moffett tells Barron's. "It doesn't take a genius to figure out that if you take out nearly two million people, there'll be a pretty meaningful impact on industry growth rates, so the setup for telecom stocks for the rest of the year looks pretty unattractive."

The telecom companies aren't worried. An AT&T spokesperson pointed to comments Chief Financial Officer Pascal Desroches made at a Deutsche Bank conference in March. Desroches said that the company had carried on adding customers even as the Biden administration clamped down on immigration, adding that he was "reasonably confident" it would be able to navigate the Trump administration's crackdown as well.

Verizon has yet to see any impact from a drop in immigration, a spokesperson said. A spokesperson for T-Mobile referred to comments Consumer Group President Jonathan Freier made on a first-quarter earnings call in April. Freier said T-Mobile didn't expect to see "a whole lot" of impact in terms of immigration, citing the strength of the company's premium monthly subscription business.

The companies may not be counting on a slowdown, but they might want to look to the U.S.'s neighbor to the north.

In October 2024, Justin Trudeau, then Canada's prime minister, unveiled his own immigration clampdown, cutting the number of temporary and permanent residents the country would accept. When Canada's own Big Three mobile network operators -- BCE, Rogers Communications, and Telus -- reported first-quarter earnings earlier this year, each of them pointed to immigration as one factor driving slowing subscriber growth. The companies added just 54,000 net mobile customers over the quarter in question, the lowest figure in four years. Although Telus stock has climbed 14% this year, BCE and Rogers are down 10% and 8%, respectively.

While it has been a solid-enough first half of 2025 for the telecom industry, Trump's second term could end up being a double-edged sword for the telecom titans. The stocks were a good place to hide amid the tariff turmoil, but slowing immigration is starting to look like the GOP-shaped elephant in the room.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 02, 2025 10:44 ET (14:44 GMT)

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