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Telecom Stock Roundup: T-Mobile Data Breach, AT&T's Drone Trial & More

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In the past five trading days, telecom stocks initially declined as trade-related talks with China ended in a stalemate but gradually regained momentum as the United States reached a trade deal with Mexico to ease tensions. However, uncertainty regarding a trade settlement with Canada remained a sore issue that dented the uptrend in the final stages of the past week.

Although the markets remained enthused about a positive outcome that could eventually lead to a long-term solution, the trade-related talks of vice commerce minister of China Wang Shouwen with his counterparts in the United States — the first official exchange in two months — showed no signs of possible patch up as the issue went to the back burner. President Trump further clarified that the priority of the country was to first amicably resolve the trade issues with its immediate neighbors, then with the EU followed by China.

In tune with this rhetoric, Trump reached an agreement with Mexico to revise North American Free Trade Agreement, the three-nation pact that also involves Canada. As both sides agreed to some concessions and decided to relax regulations on the oil and gas, energy and telecom sectors to give shape to the "United States - Mexico Trade Agreement", pressure was increased on Canada to join the negotiation and resolve the trade spat by the end of this week. Although both Canada and United States hope to reach a consensus by this week, concerns of the deal falling flat remain a serious threat.
Regarding company-specific news, strategic deals, technological collaborations and deployment of 5G technology took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.    T-Mobile US, Inc. (TMUS - Free Report) announced that it has suffered a data breach that compromised some details of about 3% of its total 77 million users or about 2 million customers.

In an official statement released by the company, management revealed that customer details such as names, billing zip codes, phone numbers, email addresses, account numbers and account type (whether prepaid or postpaid) were only compromised. T-Mobile cybersecurity experts were able to thwart any further damage once the data theft was detected and shut down the unauthorized access. (Read more: T-Mobile Stock Shows Resilience Despite Data Breach)

2.    AT&T Inc. (T - Free Report) collaborated with temperature control pharmaceutical packaging provider, Softbox Systems, to test the efficacy of the delivery of temperature-sensitive medicines using drones. The trial run, if proven successful, is likely to pave the way for delivery of critical medicines during period of crisis.

Powered by AT&T’s Internet of Things technology, the test run featured an LTE-connected drone carrying Softbox’s thermal packaging system ‘Skypod’ and medicines from healthcare firm Merck & Co., Inc. The trials were conducted in various locations across Puerto Rico. (Read more: AT&T Partners Softbox to Test Drones for Medicine Delivery)

3.    Nokia Corporation (NOK - Free Report) announced that it has secured a €500 million loan from the European Investment Bank to accelerate its R&D efforts on 5G technology.

Per the terms of the transaction, Nokia will employ the amount to boost its 5G development activities, which is believed to be the next-generation of mobile telecommunications. The move supports the company’s emphasis on R&D and innovation in order to produce enabling technologies for innovation and growth in Europe. 5G technology will likely enable faster speeds, massive connectivity and reliable networks for customers. (Read more: Nokia Secures EUR 500M EIB Loan to Accelerate 5G R&D Efforts)

4.    ADTRAN, Inc. (ADTN - Free Report) announced that select utility service providers like Sequachee Valley Electric Cooperative, Meriwether Lewis Electric Cooperative, North Alabama Electric Cooperative and Tombigbee Electric Cooperative have selected its access solutions to deliver Gigabit broadband to their communities.

The company’s solutions are designed to maximize the existing network while enabling migration to Gigabit and new software-based deployment models. Gigabit service allows rural communities to participate in today’s globally-connected marketplace, thereby fostering economic growth, access to better educational and healthcare services, and several other facilities. (Read more: ADTRAN to Offer Gigabit Broadband Solutions in Rural America)

5.    ARRIS International plc’s (ARRS - Free Report) subsidiary — Ruckus Networks —announced that it is partnering with Facebook, Inc.’s Express Wi-Fi Certified venture that allows Wi-Fi access point vendors to build Wi-Fi hardware compatible with Express Wi-Fi.

As a result, operators partaking in the program will deploy the Ruckus Virtual SmartZone (vSZ) controllers and certified indoor/outdoor Wi-Fi access points in high-traffic public areas in Africa, India and Indonesia. The Ruckus vSZ is a network functions virtualization-based and cloud-ready wireless LAN (WLAN) controller for service providers and enterprises ready to elevate their WLAN deployment to the next level of flexibility, resiliency and scale. (Read more: ARRIS Unit Partners Facebook Express Wi-Fi Certified Program)

Price Performance

The following table shows the price movement of some of the major telecom stocks over the past week and during the past six months.

In the past five trading days, QUALCOMM Incorporated (QCOM - Free Report) was the major gainer with the share price increasing 3.4%. AT&T was the major decliner with its stock losing 1.4%.

Over the past six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 17.4% while AT&T declined the most with its shares falling 11.7%.

Over the past six months, the Zacks Telecommunications Services industry has recorded a flat trajectory while the benchmark S&P 500 Index has gained 9.4%.

What’s Next in the Telecom Space?

In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the outcome of trade-related talks with Canada and how the telecom sector braces itself for the impact of the trade war with China.

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