U.S. telecom stocks witnessed a steady decline over the past week as increasing coronavirus cases from the Omicron variant intensified fresh lockdown fears across Europe. Higher infection rates across the country fueled speculations about the efficacies of the already administered vaccines and the need for booster doses. Although President Biden refused to enforce a nationwide lockdown at the moment, strict measures to check the spread of the deadly virus were initiated. The industry witnessed a pullback due to the inherent uncertainty. In addition, rising inflationary pressures weighed on essential consumer items and increased raw material costs, further inducing an industry downtrend.
Leading telecom carriers across Europe have sought help from U.S. tech giants to bear some of the infrastructure costs required to upgrade to a 5G and fiber optics network to effectively handle a large quantum of data. They argued that spectrum prices are being kept unreasonably high by several EU governments, and in order to sustain the development of the network assets that are monetized by the U.S. tech firms, a substantial amount should also be borne by their American counterparts. Notable company-specific news that grabbed the spotlight over the past week includes AT&T Inc.’s ( T Quick Quote T - Free Report) business update and Qualcomm Incorporated’s ( QCOM Quick Quote QCOM - Free Report) launch of the latest 5G mobile platform. Also, Vodafone Group Public Limited Company ( VOD Quick Quote VOD - Free Report) conducted trials for eco-friendly mobile masts, Nokia Corporation ( NOK Quick Quote NOK - Free Report) inked a five-year deal with Ooredoo and TELUS Corporation ( TU Quick Quote TU - Free Report) unveiled its 2021 Reconciliation and Indigenous Connectivity Report. Meanwhile, U.S. Commerce Secretary Gina Raimondo has urged Congress to approve $52 billion to expand domestic manufacturing of semiconductor chips. This, in turn, is likely to help the industry bridge the huge demand-supply imbalance and step up the production of various telecommunications equipment and related products. Recap of the Week’s Most Important Stories
1. The top management of AT&T recently debriefed investors about the current business situation, underlying growth opportunities and its progress on various operational metrics. Jeff McElfresh, the company’s chief executive officer, also shed some light on continued business transformation initiatives to create long-term value for shareholders.
McElfresh reiterated that AT&T is focusing on core wireless businesses to maintain its leading market position as the industry continues to benefit from a healthy uptick in demand amid the lingering coronavirus scare. The company aims to profitably increase its postpaid subscriber base leveraging its network quality and market penetration capabilities. 2. Qualcomm has unveiled its latest 5G mobile platform — Snapdragon 8 Gen 1. Featuring advanced 5G, AI, gaming, camera, and Wi-Fi and Bluetooth technologies, the Snapdragon 8 is likely to transform the next generation of flagship mobile devices. It will be adopted by global original equipment manufacturers and brands, including Motorola, OnePlus, Oppo, Redmi and Sony. Commercial devices are expected by the end of this year. The new mobile platform brings unparalleled connectivity, photography, AI, gaming, sound and security experiences to a smartphone. 3. In a concerted effort to reduce harmful emissions and achieve net-zero in the U.K. by 2027, Vodafone is conducting trials for eco-friendly self-powered mobile phone towers across the country. If the test results are conducive and economically viable, the company will deploy the phone masts even in the most remote locations without requiring them to be connected to the electricity grid. The “Eco-Towers” run on renewable energy sources like wind and solar power for self-powered battery operations and eliminate the dependencies on diesel generators for backup power. Vodafone has been working in unison with Crossflow Energy Company to develop these phone towers, leveraging the latter’s know-how to maximize renewable energy from a combination of wind, solar and battery storage solutions. The trials are being conducted in association with Cornerstone – a leading U.K.-based mobile infrastructure services company. 4. Nokia has been selected by Ooredoo Group to deploy multiple technologies, including 5G, radio access network, Core, Optics, IP and microwave, in the Middle East, North Africa and Southeast Asia. The multi-country, five-year deal builds on Nokia’s partnership with Ooredoo. It will see Nokia expand Ooredoo’s existing network and introduce 5G services. The deployment is expected to be completed by 2026 in these countries. Per the deal, Nokia will deploy equipment from its AirScale RAN portfolio on sites across North Africa and Southeast Asia. Nokia’s AirScale radio platform has the capability of delivering 5G services to customers across different spectrum bands. The deal covers digital deployment services for a faster time to market and technical support. 5. TELUS recently unveiled its 2021 Reconciliation and Indigenous Connectivity Report. The Canada-based telco has included its first-ever Indigenous reconciliation action plan in the report. Supported by Indigenous frameworks of reconciliation, the plan focuses on addressing the essential connectivity requirements of the diverse native communities residing across TELUS’ serving areas. TELUS aims to provide local people with crucial connectivity, tools and resources, in turn, strengthening productive relationships. Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and six months.
Image Source: Zacks Investment Research
In the past five trading days, none of the stocks gained while AT&T has declined the most, with its stock falling 10.1%.
Over the past six months, Arista has been the best performer, with its stock appreciating 31.2% while Bandwidth has declined the most, with its stock falling 79.4%. Over the past six months, the Zacks Telecommunications Services industry has declined 16.5% while the S&P 500 has rallied 9.2%. Image Source: Zacks Investment Research What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will remain glued to how the administration counters the risks associated with the Omicron variant and implements key policy changes to safeguard the interests of the industry and address the bottlenecks to spur growth.