Telecom Stock Roundup: Sprint Exploring Wireless Tie-up With Cable MSOs, Qualcomm To Face FTC Lawsuit

Last week has been quite eventful for the telecom industry. Per a recent The Wall Street Journal report, U.S. national wireless carrier Sprint Corp. (NYSE:S) is exploring a merger or network-resale agreement with two major U.S. cable multi-service operators (MSOs), Comcast Corp. (NYSE:S) and Charter Communications Inc. (NASDAQ:CHTR) .

The approval of the negotiation is likely to provide boost to Sprint as well as the two U.S. cable MSO’s wireless offerings. However, nothing concrete has been confirmed by any of the companies'.This reported negotiation with Comcast and Charter Communications has put Sprint’s merger talks with T-Mobile US Inc. (NYSE:S) on hold till the end of this July.

Moreover, Sprint’s wholly owned prepaid subsidiary, Virgin Mobile USA, has inked a deal with tech giant Apple Inc. (NASDAQ:AAPL) , to relaunch itself as an exclusive iPhone carrier, amidst stiff competition poised by others on similar policies.

According to a recent report by Business Insider, U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) , is considering licensing consumer data from other leading telecom operators. Verizon wants to have access to a significant chunk of wireless consumer data that can be used for ad targeting. To this end, the company is exploring the possibility of forming a data partnership with peers, such as, T-Mobile US, Sprint, Telefonica SA (NYSE:TEF) and Vodafone Group plc. (NASDAQ:VOD) .

Meanwhile, largest mobile chipset manufacturer Qualcomm Inc.’s (NASDAQ:QCOM) proposal, forwarded in Apr, 2017, to dismiss the anti-trust lawsuit filed against it by the U.S. Federal Trade Commission (FTC) was recently denied by the U.S. District Judge, Lucy Koh, of the Northern District of California in San Jose. The ruling judge stated that FTC’s antitrust lawsuit against the company can proceed.

Per a recent report by the New York Post, Charter Communications is considering bidding for privately held Cox Communications Inc. Notably these two companies are the second and third largest cable MSOs, respectively, in the U.S. However, neither company has confirmed the news.

In a separate development, leading wireless tower operator and real estate investment trust Crown Castle International Corp. (NYSE:CCI) has concluded the acquisition of privately-held Wilcon Holdings LLC. With this acquisition, Crown Castle will attain ownership rights of over 28,000 route miles of fiber. Crown Castle currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

U.S. telecom giant AT&T Inc. (NYSE:T) has unveiled its expected plans to start commercial deployments of both fixed and wireless 5G network in late 2018 or early 2019. The companyis looking forward to include virtualized Radio Access Networks core in trials. With this, the company aims to provide a more efficient wireless network with Total Cost of Ownership reduction. Additionally, the company’s product, AT&T NetBond, is providing its user’s access to over 100 cloud software and service providers that are hosted on Amazon (NASDAQ:AMZN) Web Services’ (AWS) platform.

Read the last Telecom Stock Roundup for Jun 22, 2017.

Recap of the Week’s Most Important Stories

1. If the report about Sprint-Comcast-Charter Communications joint venture comes true, we might witness two scenarios unfolding in the coming days. On one side, Comcast and Charter Communications may be working on plans to ink a network-resale agreement on better terms, which will enable them to resell services on Sprint’s wireless network. On the flip side, the two cable giantsjointly maybe considering Sprint acquisition. (Read more: Is Sprint Mulling Over Wireless Talks with Comcast-Charter?)

2. In Jan 2017, FTC filed a lawsuit in the U.S. District Court of the Northern District of California claiming that Qualcomm has resorted to anticompetitive measures to maintain monopoly in baseband chipset market. FTC highlighted Qualcomm's "no license, no chips" policy under which the company is said to have misused its position. Qualcomm allegedly refused to sell chips unless customers sign a patent license agreement and pay fees to the former. (Read more: FTC's Anti-Trust Suit against Qualcomm Remains on Track)

3. Advertisement on the mobile video platform is gradually shifting from simple selling of banner ads on the mobile web to automated or programmatic ad selling. Verizon plans to create an innovative digital advertisement platform that can challenge tech giants Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Twitter. Management has decided to unite its AOL division with Yahoo’s core Internet assets under one umbrella – Oath. This new division will be part of the company’s Media and Telematics organization. (Read more: Is Verizon Mulling Over Borrowing Consumer Data from Rivals?)

4. In Jan 2017, AT&T joined Ericsson (BS:ERICAs) and Qualcomm to test the initial 3GPP 5GNR specification in the second half of 2017. The trio planned to deploy 28GHz and 39GHz spectrum bands, using Qualcomm’s prototype devices and Ericsson’s base station solutions. Ahead of 5G services, AT&T is also planning ‘mobile-first’ 5G trials in 2017. AT&T has nearly 400MHz of mmWave spectrum which is one of the building blocks of 5G, offering the speed and capacity to allow users to do things like download HD movies in seconds. (Read more: AT&T to Start Deploying 5G Network in Late '18 or Early '19)

5. Last year, Charter Communications completed two major acquisitions of Time Warner Cable and BrightHouse Network for a combined $67.1 billion net of debt. These two deals have benefited the cable MSO in terms of geographic expansion and operating cost synergies. This, in turn, will boost the bottom line and free cash flow. However, the company is yet to complete the integration process. (Read more: Is Charter Communications Mulling to Buy Cox Communications?)

Price Performance

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

In the last five trading sessions, share price movement of most of major telecom stocks witnessed a mixed trend. T-Mobile US (3.53%) lost significantly. However, in the last six months, the price performances of most of the major telecom stocks were positive. Among the stocks that gained substantially are America Movil (27.62%), Telefonica (17.87%), Charter Communications (16.47%), Comcast (14.67%) and DISH (10.86%). In contrast, Verizon lost 14.66%.

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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