In the past week, the U.S. telecom stocks have witnessed a steady uptrend followed by a slight decline toward the end as 5G momentum picked up steam with new 5G handset models unveiled by Apple Inc. The launch of iPhone 12, which promises 10 to 12 times faster 5G network speed than currently available in 4G wireless networks, is likely to spur more technological innovation from carriers and application developers to upgrade their networks in order to tap the full potential of 5G. The industry was further buoyed by the formation of the Next G Alliance, with all the leading firms collaborating under the Alliance for Telecommunications Industry Solutions to foster R&D, standardization and market readiness for 6G technology in North America.
The 5G network in the United States is mostly offered through low-band wireless spectrum that is relatively slower than high-band spectrum but more dependable across long distances. Although some network operators offer mid-band 5G services in select areas, it is yet to permeate across the length and breadth of the country. In addition, 5G is being offered in some areas across millimeter band that utilizes the spectrum with wavelengths between 10 millimeters (30 GHz) and 1 millimeter (300 GHz). The introduction of 5G smartphones is likely to encourage the telecom operators to make 5G network more pervasive, spurring infrastructure upgrade with more wireless spectrum expected to be made available by the government.
In order to promote more industry participation, almost every major player in North America has come together for the Next G Alliance for a unified approach to prepare a 6G roadmap. This cohesive strategy aims to undo the 5G development cycle that was mostly done independently and strives to harness the collective strength to better address the evolving and competitive landscape.
Meanwhile, various associations representing communications service providers have formally urged President Trump to disown a purported move to form a government-backed 5G network. This followed reports that the Department of Defense is mulling a bid process to select a company to build the government 5G network and create a government subsidized entity. They argued that this would negate huge quantum of private sector led investments and put the broader federal objective on the backfoot.
Regarding company-specific news, 5G deployment, collaboration, segment rejig and acquisition took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. (VZ - Free Report) continues to lead the industry with its 5G Ultra Wideband service. The telecom giant has expanded coverage of 5G service to 19 new cities, 19 stadiums and six airports. Also, its 5G Nationwide service is available to more than 200 million people in 1,800 cities across the country.
Verizon is set to offer the first Apple 5G iPhone and bring new capabilities to customers with its 5G Ultra Wideband and Nationwide networks. Customers will be able to get the new iPhone 12 lineup, including iPhone 12 Pro, iPhone 12 Pro Max, iPhone 12 and iPhone 12 mini.
2. Ericsson (ERIC - Free Report) has collaborated with a leading telecommunication services provider — China Telecom — to conclude a 5G Standalone (SA) data call over the latter’s commercial network. The data call trial capitalized on Ericsson’s avant-garde spectrum sharing technology to deliver superior 5G experience to customers, while accelerating the 5G rollout process. Notably, the 5G data call trial run was conducted in the city of Deyang, China over a 2.1GHz 5G network of China Telecom.
The latest tech milestone is touted as CChina’s first 5G SA data call test over a commercial network. The partnership will enable Ericsson to leverage its best-in-class capabilities in wireless core services platform, thereby reinforcing its position in the East Asian country.
3. Nokia Corporation (NOK - Free Report) has secured a prime contract from Telefónica, S.A.’s U.K. subsidiary to support the latter’s existing network connectivity as it transitions to cloud architecture. The contract for undisclosed amount also aims to facilitate rendering reliable 5G services to more than 34.1 million customers of the carrier.
In particular, Nokia will deploy its cloud-native Subscriber Data Management software to centralize user data into a single, robust and secure User Data Repository. This central register with single point of provisioning will save operating costs and significantly speed up time to market while offering unrivalled scaling capabilities to meet the most stringent requirements.
4. In a bid to simplify its day-to-day operations with enhanced capabilities, Telefonica, S.A. (TEF - Free Report) recently announced the consolidation of three of its global businesses under a single umbrella — Telefonica Global Solutions. Markedly, the latest move is part of Telefonica’s ongoing transformation process in order to strengthen its international businesses. As part of this segmental rejig, wholesale and roaming along with multinational business segments have been incorporated into a single unit to speed up operational execution and maximize synergies with greater flexibility.
As a wholly owned subsidiary, Telefonica Global Solutions will strengthen global business operations and facilitate seamless connection between customers and partners with a consistent service offering. Apart from delivering innovative solutions to Telefonica customers, the all-in-one segment has been entrusted with the responsibility of undertaking projects for global clientele.
5. In a concerted effort to play a greater role in global enterprise cloud communications, Bandwidth Inc. (BAND - Free Report) has inked a definitive agreement to acquire Voxbone for an enterprise value of €446 million ($527 million). The transaction is likely to be accretive to non-GAAP earnings post completion of the deal, subject to mandatory closing conditions and regulatory approvals.
The transaction complements Bandwidth’s product portfolio and enables it to offer a unified software platform to better serve global customers. The integrated offering will facilitate firms to combine voice, video and text communications as part of their digital transition and help transform enterprise cloud communications for superior customer experience.
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, Arista has been the best performer with its stock up 7%, while AT&T was the biggest decliner with its stock falling 4.8%.
Over the past six months, Qualcomm has been the best performer with its stock appreciating 40.8%, while AT&T was the sole decliner with its stock falling 9.7%.
Over the past six months, the Zacks Telecommunications Services industry has rallied 5.1% and the S&P 500 has gained 24.7%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the TikTok saga unfurls and whether President Trump gives a go-ahead to the transaction.
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