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Telecom Stock Roundup: Verizon's 5G Broadband in 2018, Qualcomm Sues Apple Again

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The U.S. telecom did not witness much development last week. Nevertheless, a few are worth taking note of.

Verizon Communications Inc. (VZ - Free Report) plans to launch next-generation 5G wireless residential broadband services in three to five U.S. markets in 2018. The first commercial launch is scheduled in Sacramento, CA, in the second half of 2018. Verizon will be using millimeter-wave spectrum (radio signals) instead of copper or fiber cables, in order to provide customers with unmatched wireless speeds for Internet access.

Qualcomm Inc. (QCOM - Free Report) recently filed three new patent infringement complaints against tech giant Apple Inc. (AAPL - Free Report) . The leading wireless chipset manufacturer claimed that 16 of its patents were being used by Apple in its iPhones. The three cases were filed in the U.S. District Court for the Southern District of California in San Diego. Notably, on Nov 29, 2017, Apple alleged that Qualcomm's Snapdragon mobile phone chips, which power various Android-based devices, infringe Apple's patents.

T-Mobile US Inc. (TMUS - Free Report) has requested for Special Temporary Authority (STA) from the Federal Communications Commission (FCC) to test microwave radio spectrum bands in two sites in Bellevue, WA. The company has plans of evaluating microwave radio spectrum with integrated antenna for the 71-76 GHz and 81-86 GHz bands.

Sprint Corp. (S - Free Report) reportedly filed a patent infringement complaint against Mediacom Communications in the federal court in Delaware. Mediacom is a New York-based cable television and communications provider. Sprint currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Per a recent Bloomberg report, Comcast Corp. (CMCSA - Free Report) is eyeing the takeover of Sky plc , a U.K.-based broadcasting company and European pay-TV provider. Sky’s technological assets will complement Comcast’s X1 platform, Xfinity-branded X1 set-top boxes and wireless services.

Charter Communications Inc. (CHTR - Free Report) and Altice USA Inc. (ATUS - Free Report) have reportedly reached an agreement to broadcast their respective regional cable news networks. Per the deal, Charter will telecast i24NEWS, which was launched by Altice USA in January. The channel is available on Altice USA’s Optimum and Suddenlink systems. Likewise, Charter’s Spectrum News NY1 will be available to Optimum users in New York, New Jersey and Connecticut.

Outside the United States, Liberty Global Plc. (LBTYA - Free Report) is reportedly considering the sale of Swiss and Austrian cable businesses. The leading European quad-play cable multi-service operator (MSO) is currently in initial talks with buyers to divest UPC Austria and UPC Switzerland units. While UPC Austria is the largest cable television operator in Austria, UPC Switzerland LLC is the largest broadband cable operator in Switzerland.

Read the last Telecom Stock Roundup for Nov 30, 2017.

Recap of the Week’s Most Important Stories  

1.    Verizon anticipates catering approximately 30 million households nationwide with the initial 5G residential broadband services. Verizon claims that its 5G network will provide a download speed of 1 Gbps (gigabit per second) which is 200 times the throughput of the existing standard 4G LTE network. As 5G continues to evolve, customers will benefit from a wide array of services which include broadband, mobile and IoT (Internet of things). (Read more: Verizon to Offer 5G Broadband Services in 5 Markets in 2018)

2.    Qualcomm’s filing is the latest development in the legal war between the companies over patents. The companies have been battling over licensing royalty payments since January 2017. A $1-billion lawsuit was slapped on Qualcomm by Apple. Qualcomm was accused of overcharging for chips and refusing to pay around $1 billion in promised rebates.

Qualcomm challenged the suit in April 2017, by clearly mentioning the value of invented technologies, their contribution and share in the industry through licensing program. (Read more: Qualcomm Slaps Apple With Patent Infringement Charges)

3.    T-Mobile US aims to initiate full-phased 5G deployment from around 2020. The company plans to use new 600MHz spectrum assets alongside mid-band airwaves and 200MHz of spectrum in the 28GHz and 39GHz bands. The company has started the densification of the network as part of the 5G effort. The company plans to roll out 2,000 more small cells in 2017 and an additional 25,000 by the end of 2018. (Read more: T-Mobile US Seeks FCC Permission for E-Band 5G Trial)

4.    Sprint accused Mediacom's digital phone and business phone services of violating its 13 patents related to voice-over-packet (VOP) technology. A VOP application allows both voice and signaling information to be transported over the packet network, instead of having a dedicated circuit for each call. However, it has to face challenges of combining legacy voice networks and packet networks. (Read more: Sprint Files Patent Infringement Charges Against Mediacom)
 
5.    The reported sale of Liberty Global’s Swiss and Austrian cable businesses was due to declining revenues and subscriber counts from the respective business units. In the last reported quarter, the company’s Swiss subscriber base declined and revenues fell 2%, due to increased competition from Swisscom. UPC Austria is a smaller business with most of its cable network in Vienna and revenues of only $342 million. (Read more: Is Liberty Global Planning to Sell Swiss & Austrian Units?)

Price Performance

The following table shows the price movement of the major telecom stocks in both the last week and last six months.

CompanyLast WeekLast 6 Months
VZ7.65%8.43%
T4.28%-6.68%
TMUS0.86%-6.07%
S-9.43%-36.81%
TEF-0.25%-11.03%
AMX-4.26%3.11%
CMCSA5.59%-9.55%
CHTR-0.66%-5.97%
DISH-2.27%-24.56%

In the last five trading sessions, share price movement of most of the major telecom stocks witnessed a mixed trend. While, Verizon, AT&T and Comcast gained significantly, Sprint and America Movil lost substantially, in the same time frame. On the other hand, price performances of most of the major telecom stocks were negative in the last six months. Sprint, DISH Network and Telefonica suffered major reverses in the stock price 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. Nevertheless, two major data, one on retail sales and another on industrial production will be released this week. Moreover, Federal Open Market Committee of the central bank will release its policy statements. The market will closely monitor these data.

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