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Zacks Industry Outlook Highlights: Telus, Telefonica Brasil, Research In Motion, Polycom and Crown Castle International

TU VIV BBRY PLCM CCI

 ZacksTrade Now

For Immediate Release

Chicago, IL – May 31, 2013 – Today, Zacks Equity Research discusses the U.S. Telecom, including Telus Corp. (TU - Analyst Report), Telefonica Brasil S.A. (VIV - Analyst Report), Research In Motion Ltd. (BBRY - Analyst Report), Polycom Inc. (PLCM - Analyst Report) and Crown Castle International Corp. (CCI - Analyst Report).

A synopsis of today’s Industry Outlook is presented below. The full article can be read at  

Link: http://www.zacks.com/commentary/27516/

 

OPPORTUNITIES

The telecommunications industry as a whole offers a number of attributes that are difficult to ignore from the standpoint of investors.

  • Telecommunications is a necessary utility: The need for telecom in both rural and urban areas, and its role in the infrastructure of both developed and developing markets, will continue to grow. In addition, economic stimulus plans in the U.S. and throughout the world should boost select service providers and equipment manufacturers.
  • Spectrum Auction: On Sep 28, 2012, the FCC decided to free up spectrum currently used by TV broadcasters for commercial wireless networks and to deploy a nationwide interoperable public-safety broadband network. Huge proliferations of smartphones, tablets, and several other pocket-sized mobile devices have significantly increased the demand for bandwidth for seamless wireless connectivity. The spectrum auction is expected to shore up $15 billion in the U.S. government exchequer.
  • Strong Demand: A recovering economy speeds up the demand for real-time voice, data, and video manifold. The FCC has estimated that within the next five years, mobile-data demand will grow 25-50 folds from its current level. These latest developments are enabling the telecom service providers to undertake large network extensions while upgrading plans.


The companies that match well with the aforementioned considerations include Telus Corp. (TU - Analyst Report), Telefonica Brasil S.A. (VIV - Analyst Report), Research In Motion Ltd. (BBRY - Analyst Report), Polycom Inc. (PLCM - Analyst Report) and Crown Castle International Corp. (CCI - Analyst Report). All these stocks currently have a Zacks Rank #2 (Buy).

 

 

WEAKNESSES

Generally the telecommunications companies that are under pressure have high debt levels and large financial leverage ratios or are unable to cope with the recent market trends. Other risks that remain are as follows:

  • Potential Business Slowdown: Lower overall top-line sales among carriers are expected to continue to weigh on capital spending decisions -- a major problem faced by equipment vendors. The companies are expected to remain focused on improving their balance sheets, financial discipline and free cash-flow generation.
  • Product Overlapping: We may see more product sharing deals between telecom, cable TV and satellite TV operators as each of these players are trying to get a foothold into each other’s territory. Even pay-TV services, offerings to business enterprises, and mobile backhaul and metro-Ethernet segments may witness more convergence. Mobile phone makers are now gradually offering tablets (small laptops); chipset manufacturers are offering personal computers and mobile phones are frequently interchanging their areas of operations.
  • Increased Competition: Technological upgrades and breakthroughs have resulted in cutthroat price competition. Product life-cycle and upgrade-cycle have been reduced drastically as several firms are introducing new products and services within a short span of time. Increasing competition is forcing every player to offer heterogeneous and bundled services.

 

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