Back to top

Image: Bigstock

Telecom Stock Roundup: AT&T Boosts Private Network, Verizon Focuses on Ads & More

Read MoreHide Full Article

The U.S. telecom stocks largely moved up in unison with the benchmark S&P 500 index in the past week, as the government continued its relentless pursuit to safeguard national interests and vowed to protect American data from being siphoned off through unlawful access. The confidence-building administrative efforts to set guardrails and legislations to lend support to domestic telecommunication companies and protect sovereign interests seemed to propel the stocks. However, a rise in fresh coronavirus-affected cases acted as a headwind toward the end of the past week, evoking bitter memories of the recent past.

After clamping various restrictions on Huawei, the Trump administration is reportedly mulling to take sterner steps to ensure that China-based apps do not gain access to private data of the Americans. Amid growing resentments about the communist nation’s laws that mandate China-based firms to cooperate with the local government, likely jeopardizing sensitive data, the U.S. government is apparently giving shape to additional measures to thwart such eventualities, which are likely to be made public next week. With healthy job market data buoying broader economic sentiments, the market seemed to be encouraged about the administrative steps initiated following the footsteps of the government of India.     

In another significant development, the U.S. House of Representatives approved the Accessible, Affordable Internet for All Act — a legislation that entails U.S. citizens, who have suffered economic hardships due to the coronavirus pandemic, to have seamless access to the Internet. The $100 billion worth of broadband funding, as part of a $1.5-trillion infrastructure bill, aims to provide free or low-cost broadband services to economically backward communities or those who were furloughed due to the virus outbreak. The bill is likely to augment an existing FCC subsidy scheme to help Americans tide over the crisis. These factors have likely created a sense of security within the industry, triggering the uptrend.    

However, a likely resurgence of the virus outbreak slightly negated the momentum at the later stages of the past week, triggering a feeling of insecurity within the industry. In addition, geopolitical tensions arising from the U.S. support for autonomy in Taiwan and Hong Kong and continued Chinese assertions in the South China Sea posed latent threats of a possible escalation in the estranged relationship between the two warring countries.

Regarding company-specific news, advertising boycott, strategic deals, modernization drive and product launches primarily took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.     AT&T Inc. (T - Free Report) has collaborated with industry partner Accenture plc. for the development of a private cellular network for energy manufacturing firm, Phillips 66. In addition to an industrial wireless connectivity solution, the collaboration is likely to sow the seeds of potential, low-latency 5G applications for the Industrial Internet of Things.

AT&T operated as the telecommunications provider for Phillips 66, functioning as the backbone of a seamless connectivity solution with dedicated network capabilities using multi-access edge compute across the licensed spectrum. This, in turn, has resulted in enhanced mobile applications in day-to-day business activities, such as safety inspection for oil distillation units and capacity tracking.
2.      Verizon Communications Inc. (VZ - Free Report) has extended its digital advertising footprint through more customer engagements in the Shark Experience platform. The strategic move is likely to redefine the way advertisers seek to reach consumers in the aftermath of the coronavirus-induced lockdown, when people were forced to stay indoors and seek the refuge of the safety of their homes.

Launched in January 2018, Shark Experience is a premium media platform jointly developed by Verizon, Greg Norman Company —  a conglomerate founded by golfing legend namesake — and Club Car — a golf and utility vehicle provider. Together the firms offer connected golf cars with customizable content, powered by Verizon’s LTE network, featuring HD touchscreen displays and built-in speakers with Bluetooth connectivity. The screens are equipped with IoT sensors, enabling them to function as advertising platforms for brands.

3.      Nokia Corporation (NOK - Free Report) furthered leadership in open solutions by ramping up the adoption of Open RAN (O-RAN) interfaces in its AirScale portfolio.

The augmentation is aimed at enabling an open ecosystem of innovation, while ensuring network performance and security. The new O-RAN capabilities will be built in control of Nokia’s AirScale software. The company’s investment in O-RAN gives assurance to communication service providers in adopting openness to secure telecom supply chain.

4.      In a bid to reinforce seamless networking infrastructure, Viasat, Inc. (VSAT - Free Report) recently announced the deployment of high-quality residential Internet connectivity services in Brazil.

The communications service provider will capitalize on the bandwidth facility from Telebras’ SGDC-1 satellite to deliver avant-garde satellite Internet services across the country. With the launch, Brazilian customers will have the privilege to subscribe to a premium home satellite Internet service via data packages up to 80 GB per month, with speeds up to 20 Mbps.  

5.       Continuing with its quest to accelerate the deployment of broadband services in rural areas, ADTRAN, Inc. (ADTN - Free Report) has collaborated with Mississippi’s Alcorn County Electric Power Association.

The electric utility company will leverage the networking equipment maker’s avant-garde XGS-PON technology to deliver multi-gigabit broadband connectivity in the rural Mississippi. Equipped with a next-gen networking architecture, the innovative platform manages network traffic through priority scheduling and offers high-bandwidth backhaul services.

Price Performance

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

In the past five trading days, Qualcomm has been the best performer with its stock rising 4%, while Motorola has been the biggest decliner with its stock decreasing 2.9%.

Over the past six months, T-Mobile has been the best performer with its stock appreciating 25.9%, while CenturyLink was the biggest decliner with its stock falling 32.6%.

Over the past six months, the Zacks Telecommunications Services industry declined 8.6%, while the S&P 500 recorded average loss of 2.6%.

What’s Next in the Telecom Space?

In addition to product launches, deals and 5G deployments, all eyes will remain glued to how the administration attempts to devise pre-emptive steps to thwart Chinese apps from data intrusion and safeguard the interests of domestic firms.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>