Last week, the telecom sector experienced a lull. As per the latest figures compiled by Heavy Reading, cable MSOs (multi-service operators) in the U.S. are set to achieve over $12 billion in annual business service revenues this year, up 20% from their milestone total of $10 billion last year. Major cable MSOs like Comcast Corp. CMCSA, Time Warner Cable Inc. TWC and Charter Communications Inc. CHTR have, of late, been firing on all cylinders to garner more traction in this market.
Meanwhile, a recent research report published by leading trade organization 4G Americas revealed that Long-Term Evolution (LTE), the next-generation (4G) super-fast wireless communications technology, is gaining rapid momentum worldwide. Following significant deployment of 4G LTE networks, LTE-A (Long-Term Evolution Advanced) wireless networks are gradually gaining solid foothold. In the U.S., all four national telecom operators, namely, Verizon Communications Inc. VZ, AT&T Inc. T, T-Mobile US Inc. TMUS and Sprint Corp. S have already deployed their LTE-A networks.
Other news that grabbed our attention is Verizon making headway in the Internet of Things (IoT) space. The company announced the availability of the world's first Cat1 LTE network features for IoT. The new offering will service cheap, low-bandwidth applications like tracking and monitoring solutions and promises to be economical as well.
On the other hand, Frontier Communications Corp. FTR announced a credit of up to $10 in the first month for customers availing services from its select range of security products. The discount will be available on Frontier’s Computer Security, Content Anywhere, Identity Protection, Equipment Protection Plans, and Premium Technical Support services.
On the international front, in Mexico, America Movil SAB AMX recently won approval from Mexican telecom regulator Federal Telecommunications Institute (popularly known as IFT) regarding the prices the company can charge as interconnection fees. In Canada, leading cable TV and media company Shaw Communications Inc. SJR recently introduced its SmartWiFi and SmartSecurity Service to bring the benefits of managed WiFi and network security to small and medium scaled businesses (SMBs).
Read the last Telecom Stock Roundup for Nov 26, 2015.
Recap of the Week’s Most Important Stories
1. At present, the number of LTE subscribers worldwide is around 907 million compared with 635 million at the end of first-quarter 2015. The trade organization 4G Americas has forecasted that this figure will reach 3.6 billion globally by the end of 2020. Currently, there are 430 commercially active LTE networks spread across 145 countries. 4G wireless networks primarily aim to cope with the substantial rise in demand for high-speed mobile data services and mobile video. (Read More: 4G LTE, LTE-A Network Deployment Gain Strong Momentum.)
2. For quite some time now, cable MSOs have been aggressively targeting the small and medium-sized business segment, which is the core area of operation for telecom operators. Various industry researches estimate that this segment is expected to offer an impressive $20 billion to $30 billion market opportunity, going ahead. The rapidly developing business services division is a major boon for cable MSOs in the U.S. (Read More: Cable MSOs Flourish on Business Services Segment Boom.)
3. This week a three-judge bench of a federal appeals court in Washington D.C. will take up the lawsuit related to the net neutrality rules proposed by the FCC (Federal Communications Commission). On Feb 26, 2015, the FCC had approved net neutrality rules after a majority voting. The new laws classify high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act. (Read More: US Awaits Court Verdict This Week on Net Neutrality Rules.)
4. Verizon is highly bullish on the IoT platform and views it as a major breakthrough. The company has been making a momentous push into the rapidly growing IoT market and is already witnessing significant returns. Notably, Verizon’s revenues from the IoT business stood at roughly $175 million in third-quarter 2015 and around $495 million in the first nine months of 2015. (Read More: Verizon Forges Ahead in IoT Space; Chalks Out Go90 Plans.)
5. Frontier Communications is trying to cash in on the holiday season fever by introducing bundled offerings to consolidate its position in the market. Of late, Frontier’s security solutions division, Frontier Secure, has led solid growth at the company. The division witnessed 90% growth year over year at the end of third quarter of 2015 and its subscriptions made a significant contribution of average revenue per customer for the company. (Read More: Frontier Unveils Holiday Season Offers for its Security Products.)
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 |
-0.60% |
-6.32% |
|
T |
0.51% |
0.39% |
|
S |
-7.31% |
-24.30% |
|
TMUS |
-6.95% |
-7.56% |
|
VOD |
-0.21% |
-10.46% |
|
CHL |
-0.54% |
-9.74% |
|
AMX |
-5.20% |
-21.53% |
|
CMCSA |
-1.91% |
3.69% |
|
DISH |
-1.13% |
-13.18% |
Over the last five trading sessions, the share price movement of most of the major telecom stocks was negative barring AT&T. Sprint (7.31%), T-Mobile US (6.95%) and America Movil (5.20%) shed the most during this period. Likewise, over the last six months, the price performance of key telecom stocks has been predominantly negative. Sprint (24.30%), America Movil (21.53%) DISH Network (13.18%) and Vodafone (10.46%) depreciated substantially over the same time frame.
What’s Next in the Telecom Sector?
On Dec 4, a federal appeals court in Washington D.C. will hear oral arguments related to the net neutrality proceedings.The federal court will determine whether net neutrality is legally valid and practicable. The fate of the U.S. ISP (Internet Service Provider) industry will depend largely on this verdict.
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