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Telecom Stock Roundup: BlackBerry Beats on Earnings, Nokia Launches AVA 5G, & More

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Over the past five trading days, telecom stocks mirrored the broader benchmark index and steadily crept up, pinning hopes on the $2-trillion economic stimulus package by the Trump administration. Despite short-term headwinds from retail store closures and supply-chain disruptions, the industry appears to be relatively better placed compared to other sectors, owing to a recurring subscription-based business model. Moreover, the government funding is likely to offset the decline in average revenue per user as telecom firms waive off late payment fees and data restrictions while offering various free services amid the coronavirus pandemic.

Telecom firms have provided the vital lifeline to countless humans as virtual communication has replaced in-person exchanges with social distancing and the work-from-home option in vogue. The firms have worked in unison to effectively handle the upsurge in data traffic, prompting the top administration to remain effusive about their contribution in the hour of crisis. The government is also reportedly utilizing location data from the industry to track active coronavirus patients in order to ensure that they are strictly following the quarantine measures. The data is helping the administration understand the underlying factors behind the spread of the disease to effectively administer precautionary steps for countering it. The industry now seeks several coronavirus-related temporary deregulations from the Federal Communications Commission (FCC) beyond the stipulated 60-day period, particularly for smaller and rural firms. These include a moratorium on several deadlines, suspension of rules, and unlocking of subsidies of Universal Service Fund related to healthcare, lifeline, E-rate and Connect America Fund.

Meanwhile, with the coronavirus threat subsiding in China, four of its major telecom firms are supposedly planning to invest 197.3 billion yuan ($27.8 billion) on 5G technology in 2020 for deploying state-of-the-art infrastructure to offset the economic impact of the virus outbreak. This is likely to spur the global 5G race again, which until now had shifted to the backbench. The strained Sino-U.S. relationship relating to the origin of the virus is likely to add to the woes. It appears that under the given circumstances, it is extremely imperative for the U.S. telecom industry to emerge stronger from the virulent attack — the sooner, the better.  

Regarding company-specific news, quarterly earnings, collaboration for the 5G network and pro-active steps to fight the virus outbreak primarily took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.     BlackBerry Limited (BB - Free Report) reported healthy fourth-quarter fiscal 2020 (ended Feb 29, 2020) results, with adjusted earnings surpassing the Zacks Consensus Estimate.

Non-GAAP net income in the fiscal fourth quarter came in at $51 million or 9 cents per share compared with $60 million or 11 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents. Total GAAP revenues increased 10.6% year over year to $282 million.
2.      Nokia Corporation (NOK - Free Report) has unveiled an out-and-out AI-backed service offering that helps communication service providers (CSPs) support future network evolution and optimize enterprise and cloud services on a global scale.

Dubbed Nokia AVA 5G Cognitive Operations, the innovative platform is expected to aid businesses and customers with reliable network connectivity. Apart from identifying new revenue opportunities and supporting CSPs with 5G network slicing, the trailblazing AVA 5G Cognitive Operations software enables operators to address service requirements and predict potential challenges accurately beforehand. Intricately designed to enhance the overall network performance, the futuristic AI service offering can even solve various network challenges 50% faster than other non-sustainable traditional network operations.

3.      With the coronavirus pandemic showing no signs of letting up, AT&T Inc. (T - Free Report) has leveraged its much-acclaimed FirstNet platform to come up with a dedicated library of mobile tools for FirstNet subscribers and first responders.

Dubbed FirstNet App Catalog, this trailblazing initiative by AT&T’s FirstNet helps the first responders, government agencies and public safety communities to gain reliable access to data, voice and text services with seamless broadband connectivity. Impressively, the dedicated teams of first responders leverage these services with the help of a well-organized catalog, which comprises a wide array of public safety applications. Some of these applications are GD e-Bridge, 10-21 Police Phone by Callyo and Response for FirstNet by Intrepid.

4.      Responding to the gravity of the situation induced by the coronavirus pandemic, Verizon Communications Inc. (VZ - Free Report) recently announced that it provided seamless connectivity to a Mercy-class hospital ship of the United States Navy, USNS Comfort.

Equipped with nearly 1,000 hospital beds and a pharmacy, USNS Comfort is a gigantic hospital ship that provides on-site and dedicated emergency services to the combatant forces deployed in war or some other critical operations. In order to ease the pressure on public health institutions, Verizon provided seamless networking facilities to the naval ship with the help of a reliable and secure circuit.

5.       In a bid to keep customers entertained with high-speed broadband connectivity amid the ongoing COVID-19 pandemic, Altice USA, Inc. (ATUS - Free Report) is providing its customers with a range of free, on-demand, family-friendly content and Internet services.

Markedly, the offering will be available to both Suddenlink and Optimum video customers. Altice will provide free on-demand and live access to exclusive content from a plethora of informative and feel-good channels like — Discovery Family, DIY Network, Hallmark Drama and Cooking Channel — to its customers through Apr 22. In addition, the company will offer a 2-month free access to Internet services through its “Altice Advantage” program.

Price Performance

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

In the past five trading days, T-Mobile has been the biggest gainer with its share price increasing 7%, while Motorola has been the biggest decliner with its stock decreasing 6%.

Over the past six months, T-Mobile has been the best performer with its stock appreciating 9.5%, while AT&T was the biggest decliner with its stock falling 32.6%.

Over the past six months, both the Zacks Telecommunications Services industry and S&P 500 has recorded average loss of 11.1% each.

What’s Next in the Telecom Space?

In addition to product launches, deals and 5G deployments, all eyes will remain glued to how the administration tackles the adversities and attempts to mitigate the virus’s overall impact on the industry as first-quarter earnings lurk around the corner.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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