Telecom Stock Roundup: AT&T Faces Deceptive Ad Trial, T-Mobile US Launches Smartphone

The telecom industry had a mixed run on the bourse last week. Nevertheless, a few developments made to the headlines.

U.S. telecom behemoth AT&T Inc.’s (NYSE:T) DirecTV deceptive advertising lawsuit filed by the Federal Trade Commission (FTC) in Mar 2015, is currently on trial in the federal court. The FTC wants the company to pay up to $3.95 billion as monetary relief for affected customers.

Additionally, AT&T and labor union, Communications Workers of America (CWA), approved a four-year contract with the telco’s Pacific Bell and Nevada Bell subsidiaries.This new agreement was signed after extensive discussions among AT&T, CWA, and a federal mediator provided through the Federal Mediation and Conciliation Service.The contract will include 17,000 wireline and DirecTV employees.

In a separate development, the U.S. Federal Trade Commission (FTC) has decided to investigate a complaint filed by chipset manufacturer, Qualcomm Inc. (NASDAQ:QCOM) against tech giant Apple Inc. (NASDAQ:AAPL) for infringing six of its patents covering various aspects of mobile phone technology. As part of this lawsuit, Qualcomm has also requested FTC to investigate Apple's infringing imports and issue a Limited Exclusion Order (LEO) to ban importation of iPhones and other products linked with the patent in the U.S.

Meanwhile, T-Mobile US Inc. (NYSE:T) has unveiled its first branded smartphone, the REVVL, and is promoting more models on its “JUMP! On Demand” handset leasing program. The phone features some basic specifications such as a 5.5-inch HD display, 2GB RAM, 32GB storage, a 13-megapixel rear-facing camera, a 5-megapixel front-facing camera, a 3,000 mAh battery and a rear fingerprint sensor.

U.S. telecom giant Verizon Communications Inc. (NYSE:VZ) is likely to defer the launch of an online TV streaming service, according to a recent report by AdAge. In March 2017, Bloomberg had reported that this new service would be launched by September 2017. However, per the AdAge report, it could be delayed till the end of this year. Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leading cable MSO (multi service operator) Charter Communications Inc. (NYSE:T) has come up with lucrative promotional offers in order to stay competitive. The cable MSO is offering a double-play package of Spectrum TV (more than 130 channels) and 60 Mbps internet (100 Mbps in some markets) for $29.99 each. The package includes Showtime for free of cost during the one-year span of the promotion. With an extra $5.99 for an HD set-top, the bundle costs $65.97 a month before taxes.

Regional telecom operatorCenturyLink Inc. (NYSE:T) is considering working with other established OTT (over the top) provider with a desire to offer its customer flexibility in how they want to watch the videos. Besides offering customers multiple video options, the company is also planning to earn revenues through reseller deals with OTT companies like Netflix Inc. (NASDAQ:NFLX) for selling services like Hulu to their subscribers.

Read the last Telecom Stock Roundup for Aug 10, 2017.

Recap of the Week’s Most Important Stories

1. AT&T’s DirecTV was charged for misleading customers with false marketing campaigns and not disclosing all its terms, which violated one of the FTC’s Acts. The company advertised only the first 12-month-subscription fee in a two-year contract. Moreover, it did not mention a $480 fine, in case of an early cancelation of the contract. Also, the FTC claimed that DirecTV’s website was confusing and did not convey any detailed information related to any purchase. (Read more: Trial for AT&T's $3.95B Deceptive Ad Fine Starts)

2. Accompanying the phone’s launch, T-Mobile US has also adjusted its JUMP! On Demand services. The company is marketing it as an affordable option because it will cost only $5 a month with no down payment through the company's Jump! On Demand service, or $125 up front. T-Mobile US has also debuted smart pick recommendations, which showcases affordable smartphones with high-end features and specs and will be available via JUMP! On Demand. (Read more: T-Mobile US Launches Self-Branded Smartphone REVVL)

3. Qualcomm is seeking LEO against iPhones that use cellular baseband processors other than those supplied by its affiliates. Additionally, the company is seeking a Cease and Desist Order barring further sales, marketing, advertising, demonstration, warehousing of inventory for distribution and use of imported products in the U.S. Qualcomm boasts that each of its six patents are vital to iPhone functions. While these technologies are central to iPhone’s performance, Apple continues to use Qualcomm's technology without payments. (Read more: Qualcomm Patent Violation by Apple to be Investigated by ITC)

4. AdAge reported that Verizon is still working on the specifics of the service such as pricing, programming and technology. The delay has been primarily due to sudden departure of some important executives of its online TV and content division. Initially, Verizon had decided to come up with dozens of channels nationwide for the new service. Management also stated that the new service will include some innovative features to differentiate its offering from the existing products in the market. (Read more: Will Verizon Delay Online TV Streaming Service Launch?)

5. The Spectrum TV was launched by Charter Communications, after the twin buyout of Time Warner Cable and Bright House Networks, and is aimed at uniting the viewing experience of these two big MSOs on a single podium. The new Spectrum TV app also supports legacy Charter Communications customers as well as those who came on board via the company’s acquisitions of Time Warner Cable and Bright House Networks. (Read more: Charter Communications to Lure Customers with Promotions)

Price Performance

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

In the last five trading sessions, share price movement of major telecom stocks witnessed a mixed trend. America Movil (6.75%) has gained significantly during this time frame. Likewise, the price performances of most of the major telecom stocks were mixed in the last six months. Among the stocks that gained substantially are America Movil (48.07%), Charter Communications (22.73%) andTelefonica (11.45%) while Sprint (10.75%) lost remunerably in the same time period.

What’s Next in the Telecom Space?

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.

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