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Telecom Stock Roundup: CenturyLink Disappoints in Q4; BCE & America Movil Post a Mixed Bag
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Most of the major telecom stocks lost value last week owing to multiple factors. On the earnings front, leading Canadian telecom operator BCE Inc. (BCE - Free Report) , Mexican telecom behemoth America Movil SAB de CV (AMX - Free Report) and U.S. Internet-backbone giant Level 3 Communications Inc. reported mixed financial results in the fourth quarter of 2016.
For both BCE and America Movil, total revenue grew year over year. However, earnings per share lagged the Zacks Consensus Estimate. During the reported quarter, BCE gained a net of 112,393 postpaid wireless subscribers. Moreover, the company added a net of 18,402 high-speed Internet customers and 35,905 Fibe TV customers, but lost 36,869 satellite TV subscribers.
On the other hand, America Movil's total subscriber count was approximately 363 million as of Dec 31, 2016, down 0.8% year over year. This figure includes 280.572 million wireless subscribers, 33.9 million landlines, 27 million broadband accesses and 22 million pay-TV units.
Level 3 Communications also reported mixed financial results in the fourth quarter of 2016. While the top line failed to meet the Zacks Consensus Estimate, the bottom line outpaced the same.
Furthermore, CenturyLink Inc. reported weak financial results in the fourth quarter of 2016, wherein both the bottom and the top line missed the Zacks Consensus Estimate.In the reported quarter, CenturyLink lost 5,000 high-speed broadband subscribers and 141,000 access lines but gained 7,000 Prism TV subscribers. CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) completed the acquisition of privately held XO Communications Inc.’s dark fiber optic network. The deal, valued at $1.8 billion, was announced in Feb 2016. XO’s fiber assets will enable the company to enhance its dark fiber-based solutions for its small cell network. The densification of cell network will significantly help the company to install and build its upcoming 5G network. Verizon’s competitors, such as, AT&T Inc. (T - Free Report) , Sprint Corp. (S - Free Report) and CenturyLink are also strengthening their dark fiber network for small cell wireless backhaul.
According to a recent report by FierceWireless, AT&T has decided to acquire FiberTower and its millimeter wave (mmWave) spectrum assets as part of its 5G network strategy. The financial terms of the deal have been kept under wraps. FiberTower holds an extensive footprint of mmWave spectrum in the 24 GHz and 39 GHz bands (covering around 30 towns and cities in the U.S.), formally known as Local Multipoint Distribution Service (LMDS) bands and used for fixed wireless services.
1. Quarterly net income of BCE was approximately $492 million, up a substantial 32.2% year over year. However, GAAP earnings per ADS (American Depository Share) were 55 cents, up 29.3% year over year. However, adjusted net income per ADS came in at 57 cents, falling short of the Zacks Consensus Estimate of 59 cents. Total revenue was approximately $4,271 million, up 1.8% year over year (read more: BCE Inc. Misses on Q4 Earnings, Revenues Grow Y/Y).
2. America Movil’s quarterly loss per ADR (American Depository Receipt) of 9 cents was wider than the Zacks Consensus Estimate of a loss of 4 cents. Total revenue of approximately $13,578 million highlighted an improvement of 16.9% on a year-over-year basis. EBITDA margin was 24.4% compared with 27.7% in the year-ago quarter (read more: America Movil Lags Q4 Earnings, Revenues Rise Y/Y).
3. On a GAAP basis, net income of Level 3 Communications in the reported quarter was $250 million or 70 cents per share compared with $3,323 million or $9.33 in the year-ago quarter. However, quarterly adjusted earnings per share of 60 cents surpassed the Zacks Consensus Estimate of 44 cents. Fourth-quarter total revenue was $2,032 million, down 1% year over year and was also below the Zacks Consensus Estimate of $2,065 million (read more: Level 3 Communications Tops Q4 Earnings, Revenues Lag).
4. In the fourth quarter of 2016, CenturyLink posted adjusted earnings per share of 54 cents, lagging the Zacks Consensus Estimate of 56 cents. GAAP net income was $42 million or 8 cents per share compared with $338 million or 62 cents in the prior-year quarter. Quarterly total revenue of $4,289 million was down 4.2% from the prior-year quarter and was also below the Zacks Consensus Estimate of $4,330 million (read more: CenturyLink Lags Q4 Earnings and Revenue Estimates).
5. Integration of all XO operations and facilities is expected to commence immediately. Verizon expects the transaction to deliver over $1.5 billion in operating and expense savings in net present value. XO operates a fiber-based IP and Ethernet network consisting of 20,000 route mile intercity network in the U.S. and Canada (read more: Verizon Acquires XO, Strengthens Dark Fiber Backhaul).
Price Performance
The following table shows the price movement of the major telecom players over the past week and the last six months.
Company
Last Week
Last 6 Months
VZ
-0.72%
-9.86%
T
-1.55%
-4.34%
S
-3.44%
40.13%
TMUS
-1.61%
29.91%
VOD
1.10%
-21.50%
CHL
0.94%
-8.58%
AMX
-4.09%
2.24%
CMCSA
-1.14%
11.64%
DISH
-1.01%
16.50%
Over the last five trading sessions, share price movement of most of the major telecom stocks was negative. America Movil (4.09%) and Sprint (3.44%) lost substantially over the same time frame. However, over the last six months, the price performance of most telecom stocks was mixed. Among the stocks that gained significantly are Sprint (40.13%), T-Mobile US (29.91%), DISH Network (16.50%) and Comcast (11.64%). On the other hand, Vodafone lost 21.50%, over the same time frame.
What’s Next in the Telecom Space?
We expect significant activities to continue in the telecom sector over the next week as big names like T-Mobile US, Charter Communications, Cincinnati Bell, Telephone and Data Systems and United States Cellular are gearing up to release their fourth-quarter 2016 financial results.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
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Telecom Stock Roundup: CenturyLink Disappoints in Q4; BCE & America Movil Post a Mixed Bag
Most of the major telecom stocks lost value last week owing to multiple factors. On the earnings front, leading Canadian telecom operator BCE Inc. (BCE - Free Report) , Mexican telecom behemoth America Movil SAB de CV (AMX - Free Report) and U.S. Internet-backbone giant Level 3 Communications Inc. reported mixed financial results in the fourth quarter of 2016.
For both BCE and America Movil, total revenue grew year over year. However, earnings per share lagged the Zacks Consensus Estimate. During the reported quarter, BCE gained a net of 112,393 postpaid wireless subscribers. Moreover, the company added a net of 18,402 high-speed Internet customers and 35,905 Fibe TV customers, but lost 36,869 satellite TV subscribers.
On the other hand, America Movil's total subscriber count was approximately 363 million as of Dec 31, 2016, down 0.8% year over year. This figure includes 280.572 million wireless subscribers, 33.9 million landlines, 27 million broadband accesses and 22 million pay-TV units.
Level 3 Communications also reported mixed financial results in the fourth quarter of 2016. While the top line failed to meet the Zacks Consensus Estimate, the bottom line outpaced the same.
Furthermore, CenturyLink Inc. reported weak financial results in the fourth quarter of 2016, wherein both the bottom and the top line missed the Zacks Consensus Estimate.In the reported quarter, CenturyLink lost 5,000 high-speed broadband subscribers and 141,000 access lines but gained 7,000 Prism TV subscribers. CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) completed the acquisition of privately held XO Communications Inc.’s dark fiber optic network. The deal, valued at $1.8 billion, was announced in Feb 2016. XO’s fiber assets will enable the company to enhance its dark fiber-based solutions for its small cell network. The densification of cell network will significantly help the company to install and build its upcoming 5G network. Verizon’s competitors, such as, AT&T Inc. (T - Free Report) , Sprint Corp. (S - Free Report) and CenturyLink are also strengthening their dark fiber network for small cell wireless backhaul.
According to a recent report by FierceWireless, AT&T has decided to acquire FiberTower and its millimeter wave (mmWave) spectrum assets as part of its 5G network strategy. The financial terms of the deal have been kept under wraps. FiberTower holds an extensive footprint of mmWave spectrum in the 24 GHz and 39 GHz bands (covering around 30 towns and cities in the U.S.), formally known as Local Multipoint Distribution Service (LMDS) bands and used for fixed wireless services.
Read the last Telecom Stock Roundup for Feb 02, 2017.
Recap of the Week’s Most Important Stories
1. Quarterly net income of BCE was approximately $492 million, up a substantial 32.2% year over year. However, GAAP earnings per ADS (American Depository Share) were 55 cents, up 29.3% year over year. However, adjusted net income per ADS came in at 57 cents, falling short of the Zacks Consensus Estimate of 59 cents. Total revenue was approximately $4,271 million, up 1.8% year over year (read more: BCE Inc. Misses on Q4 Earnings, Revenues Grow Y/Y).
2. America Movil’s quarterly loss per ADR (American Depository Receipt) of 9 cents was wider than the Zacks Consensus Estimate of a loss of 4 cents. Total revenue of approximately $13,578 million highlighted an improvement of 16.9% on a year-over-year basis. EBITDA margin was 24.4% compared with 27.7% in the year-ago quarter (read more: America Movil Lags Q4 Earnings, Revenues Rise Y/Y).
3. On a GAAP basis, net income of Level 3 Communications in the reported quarter was $250 million or 70 cents per share compared with $3,323 million or $9.33 in the year-ago quarter. However, quarterly adjusted earnings per share of 60 cents surpassed the Zacks Consensus Estimate of 44 cents. Fourth-quarter total revenue was $2,032 million, down 1% year over year and was also below the Zacks Consensus Estimate of $2,065 million (read more: Level 3 Communications Tops Q4 Earnings, Revenues Lag).
4. In the fourth quarter of 2016, CenturyLink posted adjusted earnings per share of 54 cents, lagging the Zacks Consensus Estimate of 56 cents. GAAP net income was $42 million or 8 cents per share compared with $338 million or 62 cents in the prior-year quarter. Quarterly total revenue of $4,289 million was down 4.2% from the prior-year quarter and was also below the Zacks Consensus Estimate of $4,330 million (read more: CenturyLink Lags Q4 Earnings and Revenue Estimates).
5. Integration of all XO operations and facilities is expected to commence immediately. Verizon expects the transaction to deliver over $1.5 billion in operating and expense savings in net present value. XO operates a fiber-based IP and Ethernet network consisting of 20,000 route mile intercity network in the U.S. and Canada (read more: Verizon Acquires XO, Strengthens Dark Fiber Backhaul).
Price Performance
The following table shows the price movement of the major telecom players over the past week and the last six months.
Company
Last Week
Last 6 Months
VZ
-0.72%
-9.86%
T
-1.55%
-4.34%
S
-3.44%
40.13%
TMUS
-1.61%
29.91%
VOD
1.10%
-21.50%
CHL
0.94%
-8.58%
AMX
-4.09%
2.24%
CMCSA
-1.14%
11.64%
DISH
-1.01%
16.50%
Over the last five trading sessions, share price movement of most of the major telecom stocks was negative. America Movil (4.09%) and Sprint (3.44%) lost substantially over the same time frame. However, over the last six months, the price performance of most telecom stocks was mixed. Among the stocks that gained significantly are Sprint (40.13%), T-Mobile US (29.91%), DISH Network (16.50%) and Comcast (11.64%). On the other hand, Vodafone lost 21.50%, over the same time frame.
What’s Next in the Telecom Space?
We expect significant activities to continue in the telecom sector over the next week as big names like T-Mobile US, Charter Communications, Cincinnati Bell, Telephone and Data Systems and United States Cellular are gearing up to release their fourth-quarter 2016 financial results.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>