Last week saw many notable developments in the telecom industry. U.S. national wireless carrier T-Mobile US Inc. (TMUS Quick QuoteTMUS - Free Report) has allowed us a sneak peek into its fourth-quarter 2016 results, prior to the scheduled release. In the quarter, the company added 2.1 million net customers, taking the total customer count to 71.5 million at 2016-end.

This marks the fifteenth consecutive quarter of more than 1 million net customer additions.T-Mobile also saw renewed strength in branded postpaid customers, with an addition of 1.2 million in the fourth quarter of 2016.

Moreover, on Jan 5, 2017, T-Mobile US dropped all additional fees and taxes on its unlimited data plans at a press event held in Las Vegas. Both new and existing customers signing up for the $70-a-month unlimited plan, called T-Mobile One, will now include multiple-line options. Additionally, T-Mobile US isn’t raising prices as part of this change and plans to cover additional fees. Hence, a family of four will enjoy savings of $20 per month, with their monthly bill dropping from $180.48 to $160.

According to a recent report by FierceWireless, U.S. telecom behemoth Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) announced its plans to put an end to the two-year service contracts for both its new and existing customers. The company further made it mandatory for all customers to sign up for its equipment installment plans (EIPs).

The upgrade fee, which was introduced last year at $20 for device payment plans or full retail purchases, is now $30. Additionally, the $40 upgrade fee for those buying phones on a 2-year contract no longer exists. The changes were made effective on Jan 5.

Meanwhile, Comcast Corp. (CMCSA Quick QuoteCMCSA - Free Report) , a leading cable MSO (multi service operator) and media giant, recently acquired video metadata technology provider Watchwith. However, the terms of the contract have been not been disclosed. San Francisco-based Watchwith and its 15 employees will become part of Comcast Metadata Products and Search Services, a unit set up to develop services for Comcast's X1 video platform.

Recently, CenturyLink Inc. , a leading regional telecom service provider, acquired Seal Consulting, a US-based SAP products provider for enterprise-wide business and technology needs. The financial terms of the deal were not disclosed. This acquisition will enhance the company’s integrated application transformation capabilities.

Further, regionaltelecom service provider Cincinnati Bell Inc. is planning to discontinue offering Local Area Service (LAS) in the Butler, Falmouth, Glencoe, Warsaw and Williamstown exchanges within the Kentucky portion of the telco’s operating area. Cincinnati Bell currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In a separate development,according to a recent LightReading report, AT&T Inc. (T Quick QuoteT - Free Report) , Ericsson AB (ERIC Quick QuoteERIC - Free Report) and Qualcomm Inc. (QCOM Quick QuoteQCOM - Free Report) announced plans to test the initial 3GPP (3rd Generation Partnership Project) 5G New Radio specification in the second half of 2017.The trio is planning to test high-band frequencies for the next-generation 5G technology, which should deliver "multi-gigabit Internet service" over the air.

Read the last Telecom Stock Roundup for Jan 05, 2017.

Recap of the Week’s Most Important Stories

1.    T-Mobile US believes that the deployment of low-band spectrum and the ongoing buildout of its retail presence are the primary factors that will drive momentum for the carrier this year. Another noteworthy development is the participation of T-Mobile US in the 700 MHz A Block spectrum sale held at the Windy City of Chicago last May. The company had spent $430 million to purchase 12MHz of spectrum from the auction. Notably, the deal will help T-Mobile US offer its "Extended Range LTE" using 700 MHz spectrum in every one of the top-ten markets in the U.S. (read more: T-Mobile US Expands in Retail, Focus on Postpaid Division).

2.    Wireless consumers pay millions and billions extra in the form of added surcharges, taxes, monthly fees and carrier price hikes every year. The practice seems to have reached its peak and carriers are still looking for new ways to fetch more from their customers. As a reverse action to such moves, the decision by T-Mobile US to remove additional fees and taxes is an exceptional step. It seems that T-Mobile US is consumer-friendly and thinks about their benefits and facilities (read more:  T-Mobile US Plans to Ban Fees, Taxes on Unlimited Data Plans).

3.    Several analysts believe that the main motive of Verizon behind the hike in upgradation fees is to enjoy some profits in the New Year. This is not the first time that Verizon has forged ahead with such dumping plans. In Aug 2015, Verizon had made a similar discontinuance of service contracts to new customers and offered them to only those existing customers who wanted to use the plans. The trashing of two-year service contracts at Verizon marks an important move in the wireless industry, which is seeing shifts from smartphone subsidies to EIPs (read more:  Verizon Dumps 2-Year Contracts, Upgrades Fee to $30).

4.    Watchwith is a developer of a deep metadata platform that can provide information about what’s occurring within a video, Multichannel reports to name a few. The technology can specifically provide information like the name of the actors who appear on TV screen, the location of a given scene, or the start of a memorable scene within a movie or a TV show. Watchwith is already a partner of Comcast and integrates its play-by-play sports component into the cable MSO’s X1 cable box (read more:  Comcast Buys Watchwith to Solidify Video Metadata Platform).

5.    The acquisition of SEAL will broaden CenturyLink’s hosting and cloud infrastructures platform. Earlier, the company acquired Orchestrate, which enhanced its Cloud platform with a Database-as-a-Service (DBaaS) offering. Further, it acquired disaster recovery specialist DataGardens. Moreover, acquisitions of Tier 3 and Platform as a Service (PaaS) provider AppFog improved CenturyLink’s cloud application capabilities (read more: CenturyLink Buys SEAL to Strengthen Enterprise Solutions).

Price Performance

The following table shows the price movement of the major telecom players over the past week and the last six months.

Over the last five trading sessions, share price movement of most of the major telecom stocks witnessed a mixed trend. AT&T and Verizon lost a significant 5.25% and 3.61%, respectively, in the same time frame. Likewise, over the last six months, the price performance of most telecom stocks depicts a mixed trend. Among the stocks that gained significantly are Sprint (79.05%), T-Mobile US (31.67%) and DISH Network (17.11%). On the other hand, Vodafone lost 16.29% in the same time period.

What’s Next in the Telecom Space?

We do not foresee any significant changes in the telecom industry or overall global economic factors that can affect the industry in the coming week. Consequently, we expect stocks to trade in line with the broader market. On the earnings front, leading Canadian telecom operator Shaw Communications will release its first quarter of fiscal 2017 financial results.

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