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Telecom Stock Roundup: Verizon Acquires LQD WiFi, Telephone and Data Systems Unit to Buy InterLinx

QCOM T VZ TDS DISH WIN TMUS

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Last week has been rather dull for the U.S. telecom industry with most of the major stocks losing value. Despite this,telecom companies witnessed a few developments which are worth noting.

Verizon Communications Inc. (VZ - Free Report) announced the acquisition of LQD WiFi LLC -- a New York-based firm specializing on the Internet of Things (IoT) technology. With the buyout, Verizon intends to deliver WiFi related public safety features for urban areas and upcoming smart cities.

Moreover, Telephone and Data Systems Inc.’s (TDS - Free Report) subsidiary, TDS Broadband Service LLC, inked a purchase agreement for Internet service provider InterLinx Communications LLC and its unit Tonaquint Networks LLC based in Southern Utah, U.S. The deal will add more than 170 route miles of fiber-optic transport of InterLinx to TDS Broadband Services.

Meanwhile, U.S. telecom regulator, Federal Communications Commission (FCC) recently fined U.S. telecom and pay-TV behemoth AT&T Inc. (T - Free Report) on anti-competitive grounds. The company’s recent zero-rating practices and its DirecTV service plans seem to suppress competition and thus violate the FCC’s net neutrality rules. The FCC has set a deadline of Nov 21, 2016 for the company within which it has to respond to the allegations.

Nevertheless, it has been quite a busy week for AT&T further witnessed two more important events in the last week. The company has announced that it help wireless customers save data costs by offering them a choice to stream videos at a lower DVD quality (480p). The feature, dubbed as ‘Stream Saver’, is similar to the ones offered by T-Mobile US Inc. (TMUS - Free Report) in its ‘Binge On’ services. Also, according to the company’s technology vendor Synacor, AT&T’s project to launch a mobile Internet portal in the fourth quarter of this year has been shelved. The new multi-platform Internet portal launch has likely been shifted to early 2017.

On the other hand,leading wireless chipset manufacturer Qualcomm Inc. (QCOM - Free Report) is leaving no stone unturned to strengthen its footprint in the field of communications and technology, especially when 5G is making inroads into the industry. Qualcomm’s subsidiary, Qualcomm Technologies, Inc., announced the launch of its first 5G New Radio (NR) spectrum sharing prototype system and trial platform.

In addition, Windstream Holdings, Inc. (WIN - Free Report) , a telecommunications and data services firm in the U.S., launched next-generation television service Kinetic in 13 North Carolina communities.

On the earnings front, DISH Network Corp. (DISH - Free Report) reported disappointing financial results for the third quarter of 2016 with the bottom and the top line missing the Zacks Consensus Estimate. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Read the last Telecom Stock Roundup for Nov 10, 2016.

Recap of the Week’s Most Important Stories

1.    With the purchase of LQD WiFi, Verizon seeks to capture opportunities related to civic innovation and IoT. LQD WiFi presently develops outdoor interactive displays that provide WiFi connectivity along with news, emergency alerts and community information. Additionally, the technology possesses the ability to collect crowd, weather and other data through its sensors in the display. (read more: Verizon Acquires LQD WiFi to Expand IoT Portfolio.)

2.    Telephone & Data Systems is quite optimistic about its merger with InterLinx, which provides wholesale fiber connections to businesses, local Internet service providers and large carriers. Tonaquint Networks provides residential and business services using both fiber-to-the-premises and wireless Internet technologies. Tonaquint Networks also offers broadband wireless services. (read more: Telephone and Data Systems Arm Takes Over InterLinx.)

3.    The FCC claims that it is not against zero rating practices but is rather looking at the varied programs being offered at different prices. However, the regulatory body believes that AT&T has gone too far with the zero rating of DirecTV Now. Moreover, in the ‘Sponsored Data’ program, DirecTV will be paying to AT&T which implies that one division will be shelling out money to another, which in a way implies that the overall company still ends up paying no money. (read more:  AT&T: FCC Calls DirecTV Now Services Anti-Competitive.)

4.    The 5G NR spectrum prototype is based on Qualcomm Technologies' sub-6GHz and mmWave 5G NR end-to-end prototypes which include both base station and user equipment. Hence, this new spectrum prototype is an add-on to Qualcomm’s existing 5G NR sub-6 GHz and millimeter wave prototype systems. Qualcomm Technologies’ spectrum sharing test bed is being expanded to support Listen-Before-Talk technology, wideband waveforms with low latency and enhancements in the radio and network protocols. (read more:  Qualcomm Launches 5G NR Spectrum Sharing Prototype System.)

5.    Quarterly net income of DISH Network came in at $307.42 million or 64 cents per share compared with $196.48 million or 42 cents in the year-ago quarter. Earnings per share of 64 cents lagged the Zacks Consensus Estimate of 69 cents.Total revenue in the reported quarter was approximately $3,746.1 million, up 0.35% year over year but below the Zacks Consensus Estimate of $3,755 million. (read more:  DISH Network Misses on Earnings and Revenues in Q3.)

Price Performance

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

Company

Last Week

Last 6 Months

VZ

-0.23%

-5.83%

T

-0.99%

-5.01%

S

7.99%

118.18%

TMUS

-0.13%

29.49%

VOD

-4.03%

-3.07%

CHL

-3.74%

-1.69%

AMX

-2.72%

-8.08%

CMCSA

2.90%

11.65%

DISH

-6.62%

19.85%

Over the last five trading sessions, share price movement of major telecom stocks was predominantly negative. While DISH (6.62%), Vodafone (4.03%) and China Mobile (3.74%) lost significant value, Sprint (7.99%) gained the most, over the same time frame. However, over the last six months, the price performance of most telecom stocks witnessed a mixed trend. Among the stocks that gained considerably were Sprint (118.18%), T-Mobile US (29.49%), DISH (19.85%) and Comcast (11.65%).

What’s Next in the Telecom Sector?

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

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