Though last week hasn’t been to eventful for telecom companies, Sprint Corp. (S) and T-Mobile US Inc. (TMUS) revealed impressive subscribers statistics. In the fourth-quarter 2014, Sprint gained a net 30,000 postpaid subscribers while T-Mobile US gained a net 1.3 million postpaid subscribers. Meanwhile, aggressive pricing competition was further fueled within the telecom industry by AT&T Inc.’s (T) introduction of a data roll-over plan.
At the same time, research firm The Global Mobile Suppliers Association (GSA) reported a strong uptake of 4G super-fast LTE network throughout the world, which has also surpassed GSA’s estimation. Furthermore, LTE-Advanced (LTE-A) network, a more powerful version of LTE, is gaining momentum. Network vendors like Ericsson LM (ERIC), Nokia Corp. (NOK), Alcatel-Lucent SA (ALU), Huawei Technologies Co. Ltd. and ZTE Corp. are expected to benefit from this trend.
Recap of the Week’s Most Important Stories
1. T-Mobile US has registered record subscriber growth in 2014, owing to the success of its Un-carrier initiatives and aggressive promotional activities. Notably, the carrier has added 8.3 million net subscribers in 2014, up a whopping 89% from 2013. Notably, the company has added 2.1 million net customers in the fourth quarter alone. In fact, the company reported branded postpaid net customer additions of 4.9 million in the year, considerably exceeding its own full-year 2014 guidance. In continuation of its impressive performance on the branded postpaid customer front, T-Mobile, in the fourth quarter alone, recorded 1.3 million new additions. (Read More: T-Mobile Retains Momentum on Record '14 Subscriber Growth.)
2. Sprint is all set to boost its 2.5 GHz network coverage. The company has sealed a $1.8 billion financing deal with three new vendors and has received another $300 million in credit from its existing Canadian financer. The company will use this money to buy 2.5 GHz network equipment.In 2013, the company had launched Sprint Spark, which incorporates Sprint’s 800MHz, 1.9GHz and 2.5GHz spectrums together with devices offering tri-band capability and high-definition voice. Moreover, Sprint has extended its super-fast LTE data speed service, running on 2.5 GHz spectrum, to 16 new markets. (Read More: Sprint's $2.1B Financing Plans to Boost 2.5 GHz LTE Network.)
3. Aggressive pricing competition among the U.S wireless carriers has intensified further.To remain in the league, AT&T has introduced a new data plan which will allow its Mobile Share Value customers to roll over their unused data limits to the next month. Both new and existing customers can enjoy this data plan effective Jan 25. Notably, AT&T boasts more than 50 million Mobile Share Value customers who will be able to enjoy this special privilege. According to the plan, the unused data which will roll over to the next month needs to be used within that month itself, before the billing cycle ends. Lately, the U.S. telecom industry has been witnessing intense price competition. (Read More: AT&T Unveils Data Rollover Privilege to Sustain Competition.)
4. The ongoing Advanced Wireless Servies-3 spectrum auction conducted by the Federal Communications Commission (FCC) has accumulated a record-breaking $45 billion after the 157th round of bidding, breezing past the regulator’s initial estimate of a little over $10 billion. Wireless networks are the key for future growth of the overall telecom industry. Unexpectedly high bidding for AWS-3 Spectrum clearly indicates that telecom operators are expecting further growth in demand for mobile data and video services in the long run. (Read More: U.S. AWS-3 Spectrum Auction Bids Skyrocket, Break Records.)
5. Long-Term Evolution (LTE), the most sought after next-generation (4G) super-fast wireless communications technology, is rapidly gaining global momentum. The Global Mobile Suppliers Association (GSA) recently reported that currently 360 LTE networks are commercially available across 124 countries. After significant deployment of 4G LTE networks, LTE-A (Long-Term Evolution Advanced) wireless networks are gradually finding solid foothold globally. 2014 was a landmark year for the growth of LTE-A networks as 49 operators in 31 countries already commercially lunched such networks.(Read More: 4G LTE & LTE-A Boom Spells Good Times for Mobile Vendors.)
Price Performance
The following table shows the price movement of major telecom players over the past week and the last six months.
|
Company |
Last Week |
Last 6 Months |
|
VZ |
+1.69% |
-4.90% |
|
T |
+0.48% |
-4.50% |
|
S |
-2.13% |
-51.07% |
|
TMUS |
+4.67% |
-10.45% |
|
VOD |
+4.78% |
+6.24% |
|
CHL |
+4.38% |
+23.42% |
|
AMX |
-3.48% |
-0.75% |
|
CMCSA |
+1.16% |
+2.22% |
|
DISH |
+2.89% |
+6.34% |
Over the last five trading sessions, the share price movement of most of the major telecom stocks was positive. Vodafone Group Plc. (VOD) was the largest gainer whereas America Movil SAB (AMX) lost the maximum value over the same time frame. Meanwhile, over the last six months, the price performance of key telecom stocks was mixed. China Mobile Ltd. (CHL) witnessed a considerable rally in stock price of 23.42% while Sprint collapsed a massive 51.07% and T-Mobile US lost 10.45%.
What’s Next in the Telecom Sector?
We do not expect any significant change in the telecom industry or in the overall global economic factors that might affect the industry in the coming week. With major telecom operators yet to release their fourth-quarter 2014 financial results, we expect stocks to trade in line with the broader market movement at least in the near-term.
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