The telecom sector saw an avalanche of earnings releases last week apart from a few other important developments. T-Mobile US Inc. TMUS and DISH Network Corp. DISH reported strong second-quarter 2015 financial results wherein both the top and the bottom line outpaced the Zacks Consensus Estimate.
On the other hand, Sprint Corp. S reported a mixed first quarter of fiscal 2015. Sprint also lost its third position to T-Mobile US in the U.S. wireless market on the basis of subscriber count.
In addition, Cincinnati Bell and Charter Communications reported encouraging second-quarter 2015 financial numbers while Time Warner Cable and CenturyLink’s results disappointed expectations. Meanwhile, Telephone & Data Systems, United States Cellular, TeleCommunication Systems and Liberty Global witnessed a mixed second-quarter 2015.
Alongside the earnings announcements, a few other developments grabbed headlines. U.S. telecom behemoth AT&T Inc. T has come up with a new TV and wireless bundled service plan, soon after the recent acquisition of DIRECTV. Under the latest scheme, customers will be able to avail both the services from a single provider under one bill, at special discounts. The service will be available starting Aug 10.
Meanwhile, a U.S. appeals court upheld a lower court's decision to overturn an earlier verdict of a $173 million patent infringement charge against Qualcomm Inc. QCOM by wireless chipset designer ParkerVision Inc.
In Europe, Nokia Corp. NOK finally reached an agreement with a consortium of German automakers consisting of BMW, Daimler and Volkswagen (owner of Audi) and private equity firm General Atlantic to sell its HERE high-definition mapping/navigation business. (Read the last Telecom Stock Roundup for Jul 30, 2015.)
Recap of the Week’s Most Important Stories
1. T-Mobile US reported financial numbers for the second quarter of 2015. GAAP net income in the reported quarter was $361 million or 42 cents per share compared with $391 million or 48 cents per share in the year-ago quarter. However, quarterly earnings per share of 42 cents were way ahead of the Zacks Consensus Estimate of 17 cents. Total revenue increased 13.8% year over year to $8,179 million in the second quarter, surpassing the Zacks Consensus Estimate of $7,965 million.
Segment wise, total Service revenues were up 12% year-over-year to $6,144 million. Sales from Equipment totaled $1,915 million, up 19.7% year over year while Other revenues were $120 million, up 18.8% year over year. (Read More:T-Mobile US Tops Q2 Earnings and Revenues, Guides Higher.)
2. DISH Network declared strong financial results in second-quarter 2015. Quarterly net income came in at $324.4 million or 70 cents per share compared with $213.3 million or 46 cents in the year-ago quarter. Earnings per share of 70 cents steered past the Zacks Consensus Estimate of 46 cents. Quarterly total revenue stood at approximately $3,832.4 million, up 3.9% year over year surpassing the Zacks Consensus Estimate of $3,788 million. Segment-wise, subscriber-related revenues grossed $3,801.4 million in the second quarter, up 4.3% from the prior-year quarter. (Read More: DISH Network Outshines Q2 Earnings & Revenue Estimates.)
3. Sprint recently reported fiscal first-quarter 2015 financial results. Quarterly net loss stood at $20 million or 1 cent per share compared with a net income of $23 million or 1 cent per share in the year-ago quarter. First-quarter net loss per share of 1 cent was significantly narrower-than-the Zacks Consensus Estimate of a loss of 8 cents. Quarterly total revenue came in at $8,027 million, down 8.7% year over year and also below the Zacks Consensus Estimate of $8,316 million. (Read More: Sprint Q1 Loss Narrower-than-Expected, Revenues Lag.)
4. AT&T will provide high-definition video service along with digital video recording facilities for four TV sets in a household. The company will also offer 10 gigabytes of shared data along with unlimited talk and text facilities for up to four wireless lines. All these will cost $200 a month in the first year. Also, customers opting for both wireless and TV services will be given a $10 discount. Availing this, customers will be able to make annual savings of $600 and above in the first year. (Read More: AT&T to Offer TV and Wireless Service Package for $200.)
5. Nokia has decided to sell its HERE map business to a consortium of German automakers. Total consideration of the deal is Euro 2.8 billion (approximately $3.1 million). Nokia expects to receive Euro 2.5 billion as net proceeds after adjusting the Euro 300 million of liabilities for the HERE division. Initially, Nokia was expecting to receive a value of €2 billion – €4 billion (about $2.2 -$4.4 billion) for the HERE segment. The deal is expected to be closed in the first quarter of 2016 subject to customary regulatory approval. (Read More:Nokia to Sell HERE Map Division to German Automakers.)
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 |
+0.02% |
-0.28% |
|
T |
-0.35% |
+2.89% |
|
S |
-9.48% |
-34.65% |
|
TMUS |
+9.99% |
+30.54% |
|
VOD |
+1.70% |
+12.30% |
|
CHL |
+1.65% |
-5.46% |
|
AMX |
+2.77% |
-10.39% |
|
CMCSA |
-4.27% |
+5.90% |
|
DISH |
+4.99% |
-11.11% |
Over the last five trading sessions, share price movement of most major telecom stocks was positive. T-Mobile US and DISH gained 9.99% and 4.99% respectively attributed to their strong second-quarter results while Sprint depreciated the most at 9.48% over the same time frame.
However, over the last six months, the price performance of key telecom stocks was mixed. T-Mobile US and Vodafone rallied a considerable 30.54% and 12.30%, respectively while Sprint and DISH lost a considerable 34.65% and 11.11%, respectively.
What’s Next in the Telecom Sector?
A few telecom firms are scheduled to release their second quarter 2015 earnings results in the coming week. Notable among them are Cablevision Systems Corp. CVC, Windstream Holdings Inc. WIN, BCE Inc. BCE and TELUS Corp. TU. Apart from this, we do not foresee any significant changes in the telecom industry in the next week.
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