Telecom Stock Roundup: Verizon Strengthens Virtual Network Services, Comcast Inks Deal With Sunrun

Last week saw a number of important developments in the telecom industry. U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) has enhanced cloud cybersecurity for its enterprise customers by adding security software of Check Point Software Technologies Ltd. (NASDAQ:CHKP) in its Virtual Network Services (VNS) platform. In a separate development, the company has also integrated Versa Networks to its software-defined networking (SDN) solutions.

Additionally, Verizon recently formed a consortium to carry out the first use of CBRS (Citizens Broadband Radio Service) band 48 spectrum in an 4G LTE Advanced (LTE-A) carrier aggregation demonstration. The CBRS band comprises 150 MHz of 3.5 GHz shared spectrum. Historically these frequencies were primarily used by the U.S. government for radar systems. 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 multi service operator and media giant Comcast Corp. (NYSE:S) has inked a 40-month deal with Sunrun Inc. (NASDAQ:RUN) on residential solar programs. Per the agreement, Sunrun will act as the exclusive residential solar energy provider for Comcast Cable (one of the primary businesses of Comcast). Comcast Cable will serve as one of Sunrun’s strategic partners through marketing campaigns in selected markets.

Moreover, Comcast has announced that it has included Videotron Ltd. to the list of those having licensed its X1 platform. Videotron will use the X1 platform to power a new IPTV (Internet Protocol TV) service. With this, Videotron will be the third cable operator in Canada after Shaw Communications Inc. (NYSE:S) and Rogers Communications Inc. (NYSE:RCI) to shift to the X1 platform.

Meanwhile, U.S. national wireless carrier Sprint Corp.’s (NYSE:S) wholly owned prepaid subsidiary, Virgin Mobile USA, has extended the unlimited service offer to its existing iPhone owners who are switching over to the carrier. Outside the United States, Mexican telecom behemoth America Movil SAB’s (NYSE:AMX) wireless wing Telcel recently entered into a wireless roaming agreement with AT&T (NYSE:T) for its Mexican users.

Read the last Telecom Stock Roundup for Aug 17, 2017.

Recap of the Week’s Most Important Stories

1. Verizon has integrated Check Point's security solution for its VNS platform for two reasons. First, Check Point’s product suite has customer demand and second, it has the ability to scale the software to meet different enterprise needs. Inclusion of Check Point’s product suite is part of Verizon’s broader plan to install an easily accessible software-defined technology ecosystem. This will enable global enterprises to deploy and manage virtual networks with flexible bandwidth and security. (Read more: Verizon Strengthens VNS Platform With Check Point Security)

2. Comcast plans to begin marketing Sunrun’s rooftop solar services to its customers in selected states later this year. This agreement follows a successful one-year solar pilot program in which participating Comcast subscribers will have the option of signing up for a Sunrun BrightSave plan. The BrightSave plan allows customers enjoy 20 years of solar energy at a fixed monthly rate. As part of this agreement, Comcast will receive fees for new customers they bring to Sunrun. (Read more: Comcast Inks Deal with Sunrun, Boosts Residential Solar Suite)

3. We believe that the increase in the adoption of small cells is because of the inconvenience of installing large towers in inaccessible areas. Verizon stated that the small cells will be used to augment its existing 4G LTE and upcoming 5G network and will primarily concentrate on high traffic locations like a business district or shopping mall. Verizon expects small cells to increase its voice capacity and data speeds as well as complement its current LTE infrastructure. (Read more: Verizon-Led Team to Test Carrier Aggregation Over CBRS Band)

4. Comcast’s next-generation web-capable X1 platform offers a hybrid IP/QAM video gateway with an advanced user interface and the ability to port third-party apps that tie into a cloud-based infrastructure. X1 is a cloud-based TV guide, inclusive of recommended web videos and a new mobile application. Using the powerful X1 platform, Videotron aims to provide customers with an advanced seamless and connected TV experience, at home or outside. (Read more: Comcast to Expand Footprint Across Canada With X1)

5. Virgin Mobile is extending the offer of unlimited talk, text and data for just $1 for a year to its existing iPhone users, who port their number to the company’s Inner Circle plan. After the first 12 months, Inner Circle subscribers will be charged $50 per month for the plan. However, if customers upgrade to a new iPhone, they will be given an additional six months of service. Until Sep 29, Virgin Mobile will ship out free SIM kits, beyond which the starter pack will cost $25. (Read more: Sprint's Prepaid Arm Extends Unlimited Service Offer)

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 was negative. However, the stock price movements were inconsequential. On the other hand, 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 (40.94%) and Charter Communications (NASDAQ:CHTR) (22.04%) while AT&T (10.33%) lost remunerably in the same time period.

What’s Next in the Telecom Space?

We neither foresee any significant change in the telecom industry, nor do we see any macroeconomic factors affecting the industry in the coming week. However, the U.S. unemployment data and ISM Service Index data are slated for release in the coming week. We believe these data will be closely monitored by investors and will have an impact on the markets.

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