T-Mobile US Inc (NASDAQ:TMUS) has emerged over its larger competitors. Given the stock growth and subscriber growth, T-Mobile stands as the most successful company in the U.S. wireless industry. T-Mobile stock remains best of breed in a worst of breed industry. With decreasing pricing power and the costly network upgrade buildout looming, now is not the time to buy TMUS stock.

Ironically, T-Mobile is not the reason I don’t recommend T-Mobile stock. The company has made bold, successful moves over the last few years. Billing itself as the “Un-carrier,” TMUS pioneered the concept of contract-free phone plans and offered benefits such as carrying over unused data allotments and phone trade-ins for early upgrades.

Its lower pricing and improved service have gained TMUS market share over its larger rivals AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ). Its recent move to include service from Netflix, Inc. (NASDAQ:NFLX) with its plans is merely the latest in a string of successful marketing initiatives. As my colleague Lawrence Meyers points out, T-Mobile added 6.14 million subscribers in 2016, more than all of its competitors combined.

John Legere Turned TMUS Stock Around

T-Mobile stock also has shown the most price growth in the wireless industry. After years of stagnation, the TMUS stock price began growing when current CEO John Legere took the helm in 2012. The stock has grown from the $12 per share range in 2012 to over $60 per share today.

Under Legere’s tenure, T-Mobile became profitable in 2013 after a $7.34 per share loss in 2012. Analysts expect TUMS stock earnings of $2.34 per share in fiscal 2017 with double-digit profit growth expected to continue. Despite this growth, the T-Mobile stock trades at around 24 times earnings, a reasonable valuation for a stock with average revenue growth above 12.5% per year.

Still, TMUS also has faced setbacks. Its recent takeover attempt of Sprint Corp (NYSE:S) failed to win Justice Department approval. Getting the deal approved would have forced T-Mobile’s majority owner Deutsche Telekom AG (ADR) (OTCMKTS:DTEGY) and Sprint’s owner Softbank Group Corp (OTCMKTS:SFTBF) to sell more of the company than either party was willing to divest.

However, many view the failed merger as a blessing in disguise for TMUS stock. As our own James Brumley pointed out, Sprint needed T-Mobile more than T-Mobile needed Sprint. The acquisition of Sprint’s valuable 2.5G spectrum would have come at the cost of owning Sprint’s massive debt load.

TMUS Stock Should Be Avoided

Despite, all the positives, I’m still reluctant to recommend a buy. The problem is not T-Mobile. The problem is the wireless industry itself. The market is largely saturated, as 77% of Americans owning a smartphone and a larger majority having some level of cellular phone service.

Hence, most of the growth has to come from TMUS taking business from one of the three other major carriers. The coming buildout of 5G will create a growth avenue the industry desperately needs. The benefits of the upgrade are too lucrative to ignore.

According to one Accenture study, 5G is expected to create 3 million jobs and bring over $500 billion in U.S. economic growth. 5G networks will perform 10 times faster than their 4G counterparts. More importantly, many technologies and businesses that are currently not possible to build will be able to launch under this improved technology.

However, 5G will also radically change the nature and cost of network construction and maintenance. Building and maintaining towers every few miles will not be sufficient for 5G service. Wireless companies will now have to mount numerous shoe-box size cells on buildings and street lights simply to cover a neighborhood.

This project is expected to cost the industry hundreds of billions. Rivals AT&T and Verizon have considerably more cash to spend on 5G. However, T-Mobile is spending billions to upgrade its spectrum portfolio and its networks.

Final thoughts on TMUS Stock

Although T-Mobile remains the most innovative company in its industry, a saturated market and the costly 5G upgrade make TMUS stock an equity to avoid at this time. A great deal of reluctance comes with making this call. TMUS has made marketing innovations that have allowed it to stand out from its larger competitors. These plans have allowed T-Mobile to become the fastest-growing company in the industry.

Unfortunately for the “Un-carrier,” wireless telecom remains a saturated industry with few growth prospects outside of a costly 5G upgrade. Given those costs and the relative lack of growth prospects, T-Mobile stock and the stocks of lesser-performing competitors should be stocks to avoid at this time.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.