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Telecom Stock Roundup: Bandwidth Beats on Q4 Earnings, Altice Buys Morris & More
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U.S. telecom stocks witnessed a rollercoaster ride over the past week as the industry continued to wade through troubled waters owing to supply chain imbalances triggered by the COVID-19 adversities. With the Biden administration passing through a transitionary phase, completing the first 100 days in the office, lack of clarity over essential policy guidelines remained another sore point for the industry. This, in turn, created an element of uncertainty, although the passage of the $1.9 trillion stimulus package by the House appeared to be the catalyst for an industry uptrend driven by the optimism that it might aid in a speedy economic recovery.
The industry was further buoyed by the news that GlobalFoundries – a U.S.-based chip manufacturing firm – will invest around $1.4 billion this year to increase its manufacturing capacity and meet the demand-supply gap. The strategic move finds resonance with an executive order signed earlier by the President to launch a 100-day review process of the supply chain mechanism in order to address the global shortage of semiconductor chips and devise ways to increase domestic production while eliminating dependence on China. Notably, the National Security Commission on Artificial Intelligence, which includes executives from blue-chip companies, has also urged the government to encourage the development of AI-enabled intelligent machines that could be used responsibly to maintain the technological advantage of the country over China and thwart extremist forces.
Meanwhile, the government has observed that 5G technology is likely to be one of its top priorities as it remained concerned regarding the potent risks of installing networks and telecommunications equipment from the communist nation. To allay such fears, China-based telecom equipment manufacturer Huawei has sought exclusive high-level talks with the Biden administration. The outcome of such a meeting could further offer key insights about the government policy pertaining to the telecom industry and the role of China within it.
Regarding company-specific news, quarterly results, acquisitions and collaborations primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Bandwidth Inc. (BAND - Free Report) reported healthy fourth-quarter 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Higher Communications Platform-as-a-Service revenues on the back of dynamic fundamentals drove the financial performance.
On an adjusted basis, quarterly net income was $3.5 million or 13 cents per share against net loss of $0.5 million or a loss of 2 cents per share in the year-ago quarter. The bottom line beat the consensus estimate by 9 cents. Quarterly revenues came in at $113 million compared with $62 million in the year-ago quarter. The top line surpassed the consensus estimate of $97 million.
2. Altice USA, Inc. (ATUS - Free Report) recently augmented its footprint in North Carolina with the acquisition of Morris Broadband LLC assets for an enterprise value of $310 million. The transaction, subject to the fulfillment of mandatory closing conditions and regulatory approvals, is likely to be funded with available liquidity and is expected to close in the second quarter of 2021.
The buyout is a strategic fit for Altice as it aims to extend its reach with greater market penetration. Post the completion of the acquisition, North Carolina will become the sixth largest state for the company (in terms of number of residential customers) out of 21 states in which it operates.
Quarterly adjusted earnings came in at 19 cents per share, which beat the Zacks Consensus Estimate by a penny. Quarterly service revenues increased 2.6% year over year to $143.9 million, primarily driven by higher on-net revenues. The top line matched the consensus estimate.
4. Nokia Corporation (NOK - Free Report) has been selected by Globe Telecom, a leading telecommunications services provider in the Philippines, to upgrade its 4G network and expand the reach of its 5G network.
Nokia will provide equipment and services from its 5G AirScale portfolio to build the Radio Access Network. Globe Telecom will use Nokia’s high-capacity AirScale massive MIMO Adaptive Antenna solution for enhanced performance. The upgrade will enable Globe Telecom to provide its customers with superior speeds on the 5G network, which runs on the 3.5GHz spectrum band.
5. Ericsson (ERIC - Free Report) has been selected by Far EasTone Telecom (“FET”) as its supplier for 5G Standalone and Non-standalone dual-mode 5G Core and Voice over LTE services. FET is a leading company in Taiwan that provides telecommunications and digital application services.
This deal is an extension of Ericsson’s 5G partnership with FET, which includes the deployment of commercial 5G in July 2020. Ericsson will help FET expand its 5G Non-standalone capabilities and Standalone evolution on the different frequencies. The deal includes planning and design services for network expansion and transformation.
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, Juniper has been the best performer with its stock gaining 0.5%, while Bandwidth was the biggest loser with its stock falling 29.8%.
Over the past six months, Arista has been the best performer with its stock appreciating 24.3%, while Bandwidth has lost the maximum at 12.8%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.7% on average, while the S&P 500 has gained 12.2%.
What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will stay on how the Biden administration handles the telecom sector against probable external threats.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Telecom Stock Roundup: Bandwidth Beats on Q4 Earnings, Altice Buys Morris & More
U.S. telecom stocks witnessed a rollercoaster ride over the past week as the industry continued to wade through troubled waters owing to supply chain imbalances triggered by the COVID-19 adversities. With the Biden administration passing through a transitionary phase, completing the first 100 days in the office, lack of clarity over essential policy guidelines remained another sore point for the industry. This, in turn, created an element of uncertainty, although the passage of the $1.9 trillion stimulus package by the House appeared to be the catalyst for an industry uptrend driven by the optimism that it might aid in a speedy economic recovery.
The industry was further buoyed by the news that GlobalFoundries – a U.S.-based chip manufacturing firm – will invest around $1.4 billion this year to increase its manufacturing capacity and meet the demand-supply gap. The strategic move finds resonance with an executive order signed earlier by the President to launch a 100-day review process of the supply chain mechanism in order to address the global shortage of semiconductor chips and devise ways to increase domestic production while eliminating dependence on China. Notably, the National Security Commission on Artificial Intelligence, which includes executives from blue-chip companies, has also urged the government to encourage the development of AI-enabled intelligent machines that could be used responsibly to maintain the technological advantage of the country over China and thwart extremist forces.
Meanwhile, the government has observed that 5G technology is likely to be one of its top priorities as it remained concerned regarding the potent risks of installing networks and telecommunications equipment from the communist nation. To allay such fears, China-based telecom equipment manufacturer Huawei has sought exclusive high-level talks with the Biden administration. The outcome of such a meeting could further offer key insights about the government policy pertaining to the telecom industry and the role of China within it.
Regarding company-specific news, quarterly results, acquisitions and collaborations primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Bandwidth Inc. (BAND - Free Report) reported healthy fourth-quarter 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Higher Communications Platform-as-a-Service revenues on the back of dynamic fundamentals drove the financial performance.
On an adjusted basis, quarterly net income was $3.5 million or 13 cents per share against net loss of $0.5 million or a loss of 2 cents per share in the year-ago quarter. The bottom line beat the consensus estimate by 9 cents. Quarterly revenues came in at $113 million compared with $62 million in the year-ago quarter. The top line surpassed the consensus estimate of $97 million.
2. Altice USA, Inc. (ATUS - Free Report) recently augmented its footprint in North Carolina with the acquisition of Morris Broadband LLC assets for an enterprise value of $310 million. The transaction, subject to the fulfillment of mandatory closing conditions and regulatory approvals, is likely to be funded with available liquidity and is expected to close in the second quarter of 2021.
The buyout is a strategic fit for Altice as it aims to extend its reach with greater market penetration. Post the completion of the acquisition, North Carolina will become the sixth largest state for the company (in terms of number of residential customers) out of 21 states in which it operates.
3. Cogent Communications Holdings, Inc. (CCOI - Free Report) reported decent fourth-quarter 2020 results, wherein the bottom line beat the Zacks Consensus Estimate.
Quarterly adjusted earnings came in at 19 cents per share, which beat the Zacks Consensus Estimate by a penny. Quarterly service revenues increased 2.6% year over year to $143.9 million, primarily driven by higher on-net revenues. The top line matched the consensus estimate.
4. Nokia Corporation (NOK - Free Report) has been selected by Globe Telecom, a leading telecommunications services provider in the Philippines, to upgrade its 4G network and expand the reach of its 5G network.
Nokia will provide equipment and services from its 5G AirScale portfolio to build the Radio Access Network. Globe Telecom will use Nokia’s high-capacity AirScale massive MIMO Adaptive Antenna solution for enhanced performance. The upgrade will enable Globe Telecom to provide its customers with superior speeds on the 5G network, which runs on the 3.5GHz spectrum band.
5. Ericsson (ERIC - Free Report) has been selected by Far EasTone Telecom (“FET”) as its supplier for 5G Standalone and Non-standalone dual-mode 5G Core and Voice over LTE services. FET is a leading company in Taiwan that provides telecommunications and digital application services.
This deal is an extension of Ericsson’s 5G partnership with FET, which includes the deployment of commercial 5G in July 2020. Ericsson will help FET expand its 5G Non-standalone capabilities and Standalone evolution on the different frequencies. The deal includes planning and design services for network expansion and transformation.
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, Juniper has been the best performer with its stock gaining 0.5%, while Bandwidth was the biggest loser with its stock falling 29.8%.
Over the past six months, Arista has been the best performer with its stock appreciating 24.3%, while Bandwidth has lost the maximum at 12.8%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.7% on average, while the S&P 500 has gained 12.2%.
What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will stay on how the Biden administration handles the telecom sector against probable external threats.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>