In the last week, most of the telecom stocks lost their value. This was in line with the broader market (S&P 500) movement due to serious concern over global economic growth. Nevertheless, this did not keep the telecom sector from witnessing consequential activities. Iliad S.A. dropped its plan to takeover T-Mobile US Inc. (TMUS). On the other hand, Liberty Global Plc. (LBTYA) received EU regulatory approval to acquire full control of Ziggo N.V.
Meanwhile, Sprint Corp. (S) has decided on discontinuing its WiMAX operations by late 2015 in order to focus more on LTE deployment. Additionally, Nokia Corp. (NOK) has won a major contract in China for the supply of 4G wireless equipment. Verizon Communications Inc. (VZ) recently launched Sony Corp. (SNE) developed Android-based smartphone named “Xperia Z3v.”
Recap of the Week’s Most Important Stories
- French telecom startup Iliad S.A. has dumped its plan to acquire T-Mobile US, the fourth largest national telecom carrier in the U.S. Since 2011, Iliad is the third company after AT&T Inc. (T) and Sprint Corp. who ultimately discard plans of taking over T-Mobile US. T-Mobile US is an attractive takeover target amid the ongoing consolidation trend within the U.S. telecom industry. Since 2011, Deutsche Telekom has been exploring several options to divest its U.S. operations. (Read More: T-Mobile US Rejects Second Bid, Iliad Scraps Acquisition Plan.)
- Liberty Global a leading cable MSO (multi service operator) in Europe has recently received the European Union (EU)’s regulatory approval to acquire full control of Ziggo N.V., the largest cable MSO in the Netherlands. The company expects to close the deal in next month. At present, Liberty Global holds a 28.5% stake in Ziggo. Notably, the company will pay around $13.6 billion to acquire the remaining 71.5% stake including its outstanding debt. The deal will be completed through a stock and cash transaction. (Read More: Liberty Global Receives EU Go-Ahead for Ziggo Acquisition.)
- Nokia Networks, the core business wing of Nokia Corp., was recently awarded a $970 million contract by China Mobile Ltd. for the supply of wireless infrastructure equipment for the latter’s ongoing 4G TD-LTE network deployment. Per the contract, Nokia Networks will provideEvolved Packet Core, GSM networking equipment, core application platforms, Operation Support Systems software and services in 2014 and 2015. China Mobile is the largest wireless operator in the world in terms subscriber count. Currently, the company supports more than 30 million customers on its home-grown LTE-TDD network. (Read More: Nokia Networks Wins Major 4G Contract from China Mobile.)
- Sprint hasreportedly announced plans to shut down its WiMAX service effective Nov 6, 2015. The company intends to shut down 6,000 cell sites by the end of 2015 and expects to incur a cost of around $50–100 million on tower shutdowns. The WiMAX network closure follows that of the iDEN Nextel network that Sprint had carried last year. The company is currently focused on deploying LTE service on the 800 MHz spectrum, now free post the iDEN network shutdown. (Read More: Sprint to Discontinue WiMAX in '15, Focus on LTE Deployment.)
- Verizon Wireless, a division of Verizon Communicationshas announced the launch of Sony's Xperia Z3v. Consumers can avail the new phone under Verizon’s network starting Oct 23, 2014. Verizon is riding high on increased smartphone sales and the introduction of the best-in-class devices is likely to boost data revenues going forward. Further, Verizon reportedly activated Voice over LTE (VoLTE) service on the latest iPhone 6 and iPhone 6 Plus, bringing its first series of VoLTE handsets into the market. (Read More: Verizon to Sweeten Android Experience with Xperia Z3v.)
Price Performance
The following table shows the price movement of major telecom players over the past week and the last 6 months.
|
Company |
Last Week |
Last 6 Months |
|
VZ |
-3.91% |
+4.38% |
|
T |
-3.64% |
-2.59% |
|
S |
+0.66% |
-24.48% |
|
TMUS |
-11.06% |
-11.82% |
|
VOD |
-10.34% |
-12.55% |
|
CHL |
-1.75% |
+31.60% |
|
AMX |
-3.90% |
+21.36% |
|
CMCSA |
-7.16% |
+5.92% |
|
DISH |
-8.35% |
+2.01% |
Over the trailing five trading sessions, the price movement for most of the major telecom stocks was negative. Only Sprint demonstrated a marginal rise while T-Mobile US and Vodafone lost the most.
Over the last 6 months, the price performance of major telecom stocks was mixed. China Mobile and America Movil witnessed considerable rally in stock prices of 31.60% and 21.36%, respectively. However, Sprint collapsed a massive 24.48% and Vodafone lost 12.55% of value over the same time frame.
What’s Next in the Telecom Sector?
We expect increased activities in the telecom sector in the next week as telecom behemoths Verizon and AT&T are scheduled to release third-quarter 2014 financial results. Further, a leading virtualization and cloud-based infrastructure solution provider Citrix Systems and video conferencing and telepresence giant Polycom will also come up with their third-quarter results. The market will closely evaluate these results in order to assess industry dynamics and future growth prospects.
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