The U.S. telecom industry remained rather subdued last week despite the fact that almost all key stocks traded in the green. Nevertheless, a few developments were worth noting.

The 600 MHz low-band wireless spectrum auction, popularly known as Incentive Auction, kicked off by the U.S. telecom regulator Federal Communications Commission (FCC) on Mar 29, 2016, recently completed its first part.

In the first part, which is essentially a reverse auction, the airwaves are being freed by TV broadcasters who no longer have any productive use of the same. The TV broadcasters have agreed to free a substantial amount of 126 MHz of spectrums for a massive $86.4 billion.In the second part of the auction process, the FCC will resale these airwaves to wireless operators, cable MSOs (multi service operators) or tech firms through competitive bidding. The second part is known as forward auction.

U.S. telecom behemoth AT&T Inc. (T Quick QuoteT - Free Report) has announced its plan -- AT&T THANKS -- to reward customers. The move came on the heels of its rival, T-Mobile US Inc.’s (TMUS Quick QuoteTMUS - Free Report) similar but far more generous ‘Get Thanked’ offering. As part of AT&T’s plan, the company will be giving out movie tickets as freebies every week. Additionally, the company has tied up with Live Nation Entertainment, Inc. (LYV Quick QuoteLYV - Free Report) to gain access to tickets for select concerts before they are made available to the public.

Regional wireline operator CenturyLink Inc. has acquired certain core networking assets from a company formerly known as Active Broadband Networks Inc. CenturyLink has been focusing on shifting its network and shift network functions to the cloud for its business customers by providing software defined networking (SDN) and network functions virtualization (NFV) services. The acquisition is in sync with this strategy and is expected to enable the company to accelerate its top line.

Meanwhile, thriving WiFi networks throughout the U.S. have become a major concern for large wireless operators. Currently, cable MSOs have deployed more than 500,000 public WiFi hotspots. This exceeds millions if WiFi homespots are also taken into account. Research-based website Heavy Reading stated that growing transmission of high-speed data, voice and video packets through wireless networks are prompting cable TV operators to explore the wireless business.

Outside the U.S., French telecom behemoth Orange (ORAN Quick QuoteORAN - Free Report) recently received a major contract to supply and maintain a public fiber network from the Vendee department in Western France. The 12-year project will receive an initial investment of €90 million (over $100 million) from the European Union’s regional development fund. All ISPs (Internet Service Providers) will be able to access this network.

Read the last Telecom Stock Roundup for Jun 30, 2016.

Recap of the Week’s Most Important Stories

1.    The FCC was initially hopeful that the whole Incentive Auction process can be completed by the end of the third quarter of 2016. However, industry watchers are now expecting the process to be much more prolonged and may continue till early 2017. Notably, the freed spectrums of TV broadcasters cannot be utilized commercially by wireless operators before 2020. Given the significant number of applications this time, the FCC expects its ongoing low-band airwave auction to be a runaway hit. (read more: First Part of the FCC Incentive Auction Sets Hefty Price.)

2.    Competition in the U.S. telecom space intensifying getting increasingly intense. With relatively small-sized carriers like T-Mobile US and Sprint Corp. (S Quick QuoteS - Free Report) luring customers through attractive offers like freebies, behemoths of the industry like Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) and AT&T have been facing challenging conditions. In order, to tackle competitive threats, it was imperative for AT&T to adopt similar measures. Nevertheless, we are concerned about the impact of the same on the company’s margins. (read more: AT&T Follows T-Mobile US, Unveils Offers to Thank Customers.)

3.    In Oct 2015, CenturyLink committed to building a robust networking platform using SDN and NFV capabilities, through which it aimed to serve its enterprise customers better. The latest purchase will help it to integrate the SDN and NFV capabilities in its network, thereby enhancing end user experience and inducing growth in the business services segment. In Jun 2016, CenturyLink bought app management specialist, ElasticBox, in a move to enable its customers to manage applications across 12 different cloud providers. (read more: CenturyLink Expanding Business, Buys Networking Assets.)

4.    Orange aims to provide 16,000 connections in 2017 which will rise to 64,000 by 2020 in western France. Finally this network will connect 70,000 households, businesses and public services departments. The company will install the FTTC network in 264 towns in the Vendee region. These networks will be eventually upgraded to the FTTH standard. Over 2015-2018, Orange has decided to invest a whopping € 15 billion (around $15.88 billion) on its existing networks in a bid to increase fixed and mobile data transmission speed by at least threefold. (read more: Windstream Holdings to Close Legacy Voice Service.)

5.    In Apr 2014, large cable MSOs together with several major IT firms and telecom organizations had formed an alliance to free up spectrums in order to expand the WiFi support network. Large business enterprises generally have point of presence throughout the world. A strong and robust wireless network is mandatory for these companies to remain connected with remote sites. Cloud-managed WiFi network has become the most efficient technology for these large business houses.  (read more: Are Cable TV Operators Exploring Wireless Network Route?)

Price Performance

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

Over the last five trading sessions, share price movement of almost all the major telecom stocks was positive. AT&T (3.73%), Verizon (3.67%) and Comcast (3.66%) were the major gainers. Similarly, over the last six months, the price performance of most of the key telecom stocks was positive. Among the stocks that gained significantly were AT&T (29.55%), Verizon (26.17%), Sprint (23.96%) and Comcast (17.94%).

What’s Next in the Telecom Sector?

We do not foresee any significant change in the telecom industry or in overall global economic factors that can have a bearing on the industry in the coming week. Consequently, we expect stocks to trade in line with the broader market movement.

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