Last week was favorable one for the telecom industry as most of the key stocks traded in the positive despite the lack of consequential developments. Among the very few activities, Comcast Corp. CMCSA has decided to launch 2 Gbps residential Internet service in Atlanta next month. The 2 Gbps network will cover 80% of Comcast’s footprint by the end of this year.
Outside the U.S., French telecom behemoth Orange ORAN is negotiating with Vivendi over the sale of an 80% stake of its video sharing portal – Dailymotion. Orange will retain the ownership of the remaining 20% stake. In a separate development, Telefonica SA TEF, the largest Spanish telecom operator, has teamed up with Alcatel-Lucent ALU and Accenture to provide constructive customer care and enhance the overall customer experience.
Meanwhile, DISH Network Corp. DISH plans to offer popular HBO Service with its Sling TV network for an additional charge of $15 per month. DISH has also announced that its live streaming multi-language television service called “DishWorld” has been converted to “Sling International”. This new service will provide global program content from nearly 200 channels in 18 languages starting at $15 a month. (Read the last Telecom Stock Roundup for Apr 2, 2015.)
Recap of the Week’s Most Important Stories
1. Comcast recently announced that it will deploy fiber-based 2 gigabits per second (2 Gbps) residential broadband Internet services in Atlanta from May 2015. Known as -Gigabit Pro- this new service will run on FTTH technology. Comcast’s Gigabit Pro network may become a threat to Google Inc.’s GOOGL ultra-high-speed fiber-based network. Gigabit Pro will double the Internet speed offered by Google fiber and will be 80 times faster than Comcast’s standard broadband Internet speed. (Read More: Comcast to Launch 2 Gbps Superfast Internet Connection.)
2. Orange, the largest telecom operator in France is set to enter into an exclusive negotiation with French media behemoth Vivendi S.A. At present, Dailymotion is the second largest Internet-based video sharing platform after Google-controlled YouTube. Currently, on an average, Dailymotion generates approximately 139 million unique visitors per month compared with 1 billion visitors of YouTube. In 2014, total revenues of Dailymotion were €64 million. Since its inception in 2005, the company is yet to achieve profitability. Orange acquired Dailymotion in two phases (2011 and 2013) for a total consideration of €120 million. (Read More: Orange in Talks with Vivendi over Dailymotion Divestment.)
3. Telefonica has announced a 4-year deal by which it will deploy Alcatel-Lucent's Motive Customer Experience Management (“CEM”) software to serve its residential customers in Europe and the Latin American countries. Telefonica plans to make use of Alcatel-Lucent's CEM products and Accenture's systems integration and transformation capacities to broaden the proficiency of its customer care centers. Specifically, Telefonica will utilize the Motive technology to automatically detect, diagnose and resolve various device troubles. (Read More: Telefonica, Alcatel-Lucent to Offer Productive CEM Solution.)
4. DISH Network, the second largest satellite TV operator in the U.S., is set to offer the popular HBO service with its newly launched Sling TV network. The company launched its Internet TV service called the “Sling TV” in Feb 2015. DISH intends to check customer churn with its latest Sling TV offering. Currently, this network offers 20 top-rated channels for $20 per month. With the latest offering, Sling TV customers will be able to watch popular HBO TV shows such as "Sex and the City" and the latest episodes of "Game of Thrones" at an additional $15 per month. (Read More: DISH Network Peps Up Sling TV Offering, Adds HBO Service.)
5. Universal Pictures, owned by Comcast, has set the cash registers ringing with its latest release “Furious 7” earning a record-high $143.6 million in the U.S. in the first week of its release. The movie released on the Easter weekend. This is the highest opening week box-office collection made by any movie in April. Notably, “Furious 7” is the ninth largest opening week box-office grosser in the U.S. of all times. In the first week of its release, the movie collected around $384 million worldwide, which is twice the size of its production budget. (Read More: Comcast Breaks April Box-Office Records with "Furious 7".)
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 |
+2.16% |
+0.80% |
|
T |
+1.43% |
-4.45% |
|
S |
+3.59% |
-19.11% |
|
TMUS |
+3.41% |
+13.23% |
|
VOD |
+1.59% |
+1.44% |
|
CHL |
+10.63% |
+19.60% |
|
AMX |
+3.32% |
-14.45% |
|
CMCSA |
+4.80% |
+8.97% |
|
DISH |
+1.60% |
+10.84% |
Over the last five trading sessions, share price movement of all major telecom stocks was positive. China Mobile Ltd. CHL gained the maximum value. Also, over the last six months, the price performance of key telecom stocks was predominantly positive. Although Sprint Corp. S and America Movil SAB AMX lost a considerable 19.11% and 14.45%, respectively, China Mobilegained 19.60% and T-Mobile US Inc. TMUS rallied 13.23% over the same time frame.
What’s next in the Telecom Sector?
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. Therefore, we expect stocks to trade in line with the broader market movement.
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