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Telecom Stock Roundup: BB, VZ Make Acquisitions to Boost Cybersecurity & More

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In the past five trading days, telecom stocks initially gained momentum but gradually lost steam as a broad sell-off in leading technology stocks led to a ripple effect across the board. Global macroeconomic woes and strengthening dollar cumulatively led to the heightened volatility in the equity market. Moreover, the unrelenting trade war tensions with China continued to hinder the smooth sailing of stocks as fresh accusations of relentless intellectual property and technology theft by the Communist nation hit the market.

The detailed 53-page report released by the U.S. Trade Representative Office accused China of continuing a state-backed campaign of sophisticated and intensified cyberattacks to siphon off data for possible collection and analysis. The report further stressed on China’s lack of corrective measures to alter its policies and practices related to the intellectual property rights and technology transfer. However, some critics viewed the timing of the report as a possible ploy by the Trump administration to strengthen its case for the resumption of trade negotiations when the two state heads meet on the sidelines of the G20 summit in Buenos Aires at month end.         

Amid such uncertainty, the Federal Communications Commission (“FCC”) has proposed a couple of measures to end the unsolicited robocalls that users have to constantly grapple with. These include creation of a national database of disconnected phone numbers that are reassigned to other users to avoid dialing the wrong customers repeatedly and enabling telecom service providers to block and filter text messages deemed as spam. The draft proposals have raised some eyebrows as consumer advocacy groups argue that it would empower telecom firms to block even legitimate text messages.

Regarding company-specific news, strategic acquisitions, 5G deployment and product launches took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.    BlackBerry Limited (BB - Free Report) recently announced that it has inked a definite agreement to acquire Irvine, CA-based cybersecurity firm Cylance for $1.4 billion in cash. The transaction, which is one of the largest in recent years, is likely to be completed prior to the end of Blackberry’s current fiscal year in February 2019.

Cylance’s highly skilled cybersecurity workforce and market-leading portfolio of endpoint solutions are a strategic fit for Blackberry and will complement its Unified Endpoint Management and QNX businesses. The company further expects that the addition of Cylance will enhance the cybersecurity capabilities of Blackberry Spark, making it an indispensible proposition for Enterprise of Things. (Read more: Blackberry to Acquire Cylance to Expand Into Cybersecurity)

2.    Verizon Communications Inc. (VZ - Free Report) has acquired PrecisionAccess solution and other Software Defined Perimeter (SDP)-related assets from privately held Vidder, Inc., for an undisclosed amount. The transaction will help the company to create a virtual network boundary to thwart any potential cyberattack.

Verizon has integrated Vidder’s advanced technology within its SDP service to enable organizations to protect application infrastructure against cyber threats. This is achieved by blocking connectivity from unknown devices and making protected devices invisible to anyone without approved access. This approach of pre-authenticated secure access to enterprise applications helps reduce the security risks associated with the multiple endpoints of an increasingly digital, mobile and virtual business world. The acquisition is likely to augment Verizon’s leading position in the market and ensure a healthy revenue stream with a significant boost in its client base. (Read more: Verizon Acquires Vidder Assets to Enhance Security Features)

3.    Motorola Solutions, Inc. (MSI - Free Report) recently announced that it has selected Aviat Networks, Inc. as the wireless backhaul provider for the State of Florida's statewide mission critical P25 network. Through this strategic collaboration, Motorola aims to strengthen its leading position in the public safety domain.

Motorola aims to leverage this extensive product portfolio and Aviat’s rich experience to build interoperable radio communications system for Florida's P25 network. The P25 project was initiated to address the need for common digital public safety radio communications standards for first-responders and homeland security/emergency response professionals. It ensures that two-way radio communications are interoperable, so that public safety responders can achieve enhanced coordination, timely response and efficient and effective use of communications equipment. (Read more: Motorola Selects Aviat as Wireless Backhaul Provider)

4.    T-Mobile US, Inc. (TMUS - Free Report) has inched a step closer to building a nationwide 5G network with the successful completion of the world’s first 5G data transmission on low-band spectrum (600 MHz). The company achieved this unique feat in association with Nokia Corporation (NOK) using global 5G standards in Spokane, WA.

T-Mobile is well on track to deliver nationwide 5G in 2020, deploying 5G-ready equipment while rolling out 600 MHz Extended Range LTE, which is already live in more than 1,500 cities and towns in 37 states and Puerto Rico. (Read more: T-Mobile Achieves 5G Data Transmission on Low-Band Spectrum)

5.    Altice USA, Inc. (ATUS - Free Report) has unveiled the Altice One Operating System (OS) 2.0, a version 2 upgrade to its Altice One entertainment and connectivity platform.

As an all-in-one entertainment system, Altice One is available to Optimum and Suddenlink cable customers. The upgrade will offer additional 4K content including English Premier League soccer. It will allow customers to restart live shows on channels like A&E, History Channel, Lifetime, Viceland, Fox News, Fox Sports 1 among others. Notably, the company will offer these features only to Optimum customers. (Read more: Altice Launches Altice One OS 2.0 to Boost User Experience)

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 biggest gainer, with its share price increasing 2.4%. Motorola was the major decliner, with its stock losing 3.7%.

Over the past six months, Verizon has been the best performer, with its stock appreciating 17.9% while AT&T Inc. (T - Free Report) declined the most, with its shares falling 8.6%.

Over the past six months, the Zacks Telecommunications Services industry declined 0.3% while the S&P 500 fell 3.1%.

What’s Next in the Telecom Space?

In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to how the United States and China approach the G20 summit amid hints of possible start to negotiations for the continued trade war.

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