T-Mobile US Inc. (TMUS - Free Report) , the third-largest national wireless operator, is planning to bolster its Internet of Things (IoT) suite. The company boasts of being the first wireless provider in North America to conduct successful tests of Narrowband IoT (NB-IoT) technology live on its commercial network.
The field tests were conducted in partnership with Qualcomm Inc. (QCOM - Free Report) and Ericsson (ERIC - Free Report) across multiple sites on T-Mobile’s live commercial LTE (Long-Term Evolution) network in Las Vegas using 200 KHz of T-Mobile’s AWS spectrum.
NB-IoT is an evolution of LTE technology based on industry standards and uses small amounts of dedicated spectrum to carry data with efficiency. With its ability to scale and support a direct pathway to 5G, NB-IoT is witnessing rapid adoption across the globe relative to other technologies.
T-Mobile US teamed up with the City of Las Vegas to deploy IoT technology throughout the city, including NB-IoT, and will be working on several similar projects. These projects include flood abatement and storm drain monitoring, smart city lighting and environmental monitoring of temperature, humidity, and gas under the city’s Innovation District.
City officials are looking forward to work with T-Mobile US to better leverage the growth opportunities from this partnership in order to better serve citizens and tourists.
Moreover, T-Mobile US customers can easily get NB-IoT technology to power their connected devices. The company helps customers instantly bring devices to market through all-in-one, low-cost IoT Access packs on certified Cat-1 modules.
The IoT Battleground
The IoT market is the latest in the line of service and business models and is rapidly gaining market traction. Using IoT to gather data points enable businesses to operate effectively and efficiently, thereby boosting their bottom line. Moreover, IoT hardware and software being cheap are good investment options for. IoT enables any physical electronic device with a valid IP-address to transfer data seamlessly over a wireless network.
We believe that this led to generous IoT investments in the last few months.
According to a recent report by market intelligence firm, International Data Corporation (IDC), total expenditure on hardware, software, services and connectivity to support IoT is expected to increase 16.7% year over year in 2017 globally, making this an $800-billion market. By 2021, IDC predicts global IoT spending to be almost $1.4 trillion.
U.S. telecom behemoths, Verizon Communications Inc. (VZ - Free Report) and AT&T Inc. (T - Free Report) have been continuously focusing on solidifying their foothold in the IoT space through various deals with different companies.
To this end, in Mar 2017, Verizon launched the first nationwide commercial 4G LTE Category M1 network to offer IoT services across its entire LTE network. However, Verizon is also pursuing NB-IoT more cautiously with plans to launch the technology in the near future.
AT&T recently launched its LTE-M (LTE for M2M) IoT network and has plans to cover Mexico by the end of the year. LTE-M is an LTE variant that caters to machine-to-machine communications. Moreover, AT&T continues to evaluate NB-IoT technology for its IoT suite but has yet to find a compelling reason to deploy the technology.
U.S. national wireless carrier, Sprint Corp. (S - Free Report) aims to complete the deployment of LTE Category 1 across its nationwide network by the end of this July. The company has plans to begin deploying LTE Cat M in mid-2018 followed by LTE Cat NB1 (NB-IoT). Both Cat-1 and Cat NB1 are part of the 3rd Generation Partnership Project (3GPP) standards process.
Research firm Gartner predicted that the usage of IoT devices is expected to increase from 8.3 billion connected devices this year to 20.4 billion by 2020 globally, outnumbering laptops, smartphone and tablets. This is because IoT devices do not require a lot of computing power. Instead, IoT collects data at the edge, pooling information to drive analytic insights.
From the technology perspective, hardware, especially modules and sensors that connect end points to networks will be the largest IoT spending category for the first few years. The services category will follow suit in later years.
Price Performance and Zacks Rank
Despite such booming prospects, the price performance and Zacks Rank of T-Mobile US is depressing.
Over the past three months, share price of T-Mobile US declined 6.21% compared with the Zacks categorized Wireless National industry’s fall of 8.93%.
We believe that T-Mobile US’ operation in a highly competitive and saturated wireless market where success depends on technical superiority, quality of services and scalability remain concerns. Moreover, the marketing costs of the low-priced promotional plans (to lure in more users) lead to high cash burn and heavy losses. We believe that such negative aspects have led to the company’s current Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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