The telecom industry saw strong performances by most of the key stocks last week. A few developments even made to the headlines.
DISH Network Corp. DISH, the second largest satellite TV operator in the U.S. started off the year impressively. According to a recent report by The Business Journal, DISH Network’s subsidiary, AirTV launched its latest streaming device, AirTV Player, a 4K Android-based streaming device which supports ultra HD (high definition) and is pre-loaded with Netflix Inc. NFLX, SlingTV and YouTube apps and that work with an over-the-air antenna for broadcast TV. Hence, AirTV marks “a single unified” platform for on-demand streaming, Internet TV, and over-the-air (OTA) local channels.
The year 2016 ended with a slew of positive developments for Dutch consumers as well as businesses. According to a recent report by The Business Journal, the long-awaited merger between the Dutch units of Liberty Global Plc. LBTYA and Vodafone Group Plc. VOD finally materialized on Dec 31, 2016. The two companies announced that Liberty Global Europe Holding B.V. and Vodafone International Holdings B.V. have formed a joint venture (JV) with equal partnership.
Meanwhile, according to a recent report by The Business Journal, U.S. telecom and pay-TV behemoth AT&T Inc. T plans to end the promotional offer for its DirecTV Now package. The ‘Go Big’ package of AT&T’s DirecTV Now, which offers more than 100 channels for $35 per month including live and on-demand programming as well as premium add-on options, is slated to end on Jan 9. AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per The Wall Street Journal report, Comcast Corp. CMCSA, a leading cable multi-service operator (MSO) in the U.S., finally settled its 13-month old scuffle with Twenty-First Century Fox, Inc. FOXA over carriage of the YES Network in New York City. Comcast signed a new pact with Twenty-First Century Fox on Jan 1. Moreover, Comcast and Charter Communications Inc. CHTR have decided to extend negotiations to find an agreeable solution regarding the existing carrier deal, which has ended on Dec 31, 2016.
Outside the U.S., Spanish telecom behemoth Telefonica SA TEF has been charged EUR 6.23 million (around $6.5 million) and EUR 30,000 ($31,304) by the governments of Andalucia and Madrid, respectively on grounds of its price hike for the Fusion package.The fines follow the filing of complaints by the Spanish consumer protection authority, FACUA. The group has also filed a court case against Telefonica with the hearing scheduled for Mar 2017 in Madrid.
Read the last Telecom Stock Roundup for Dec 22, 2016.
Recap of the Week’s Most Important Stories
1. The AirTV Player allows DISH Network’s Sling TV customers add free, live local broadcast stations into their guide using an external antenna. The media streamer has dual-band WiFi networks and a Bluetooth voice-enabled remote that can be paired with an AirTV OTA Adapter and OTA antenna. The remote features dedicated buttons for Sling TV, Netflix and Google Play Store provides voice capabilities and can control power and volume on any connected TV or sound system using infrared signals. (read more: DISH Networks Greets '17 with Latest AirTV Device.)
2. The Dutch joint venture of Vodafone and Liberty Global is called “VodafoneZiggo Group Holding B.V.” It will have 4.2 million video subscribers and 5.3 million wireless phone subscribers. The JV will operate under both the Vodafone and the Ziggo brands and will create a nationwide integrated communications provider with 7.1 million homes passed by the fiber-rich broadband network of Ziggo Group Holding B.V. and the nationwide 4G mobile coverage of Vodafone’s Dutch operation. (read more: Liberty Global and Vodafone Finally Form 50:50 Dutch JV.)
3. AT&T’s DirecTV Now can prove to be a major revenue driver in the days ahead. However, aggressive pricing related to non-applicability of data caps for the service in wireless plans may be subjected to net neutrality scrutiny. Moreover, the telco’s OTT service was charged on anti-competitive grounds by U.S. telecom regulator Federal Communications Commission (FCC). The company’s recent zero-rating practices and DirecTV plans also seem to suppress competition and thus violate the FCC’s net neutrality rules. (read more: Will AT&T DirecTV Now 'Go Big' Offer End in January?)
4. On Dec 27, 2016, Telefonica announced price hike plans for Fusion, effective Feb 2017. However, the price hike has been justified with an increase in the mobile data allowance. Fusion customers with two or four mobile lines will have to pay an extra EUR 5 every month. At the same time, the amount of data included will increase from 6 GB to 16 GB for plans with two lines and from 12 GB to 32 GB with four lines. This offer is likely to give tough competition to the latest offer of 24 GB from Orange S.A. (read more: Telefonica Faces Charges for Fusion Price Hikes.)
5. The decision of Comcast to bring back Fox News is a good one. This is because Fox News is presently one of the nation’s largest pay-TV distributors with over 20 million subscribers. The Fox news network is at its peak in terms of ratings and number of viewers in its 20-year history, courtesy of the updates on the latest presidential election. Comcast officials also expressed their content on the success in bringing back the YES Network after negotiations and deals that should favor both companies. (read more: Comcast Resolves Fox News Dispute, Inks New Carriage Deal.)
Price Performance
The following table shows the price movement of the major telecom players over the past week and the last six months.
|
Company |
Last Week |
Last 6 Months |
|
VZ |
1.68% |
-3.56% |
|
T |
0.54% |
-1.34% |
|
S |
1.03% |
95.77% |
|
TMUS |
0.91% |
36.13% |
|
VOD |
4.49% |
-19.41% |
|
CHL |
2.16% |
-6.54% |
|
AMX |
1.41% |
4.43% |
|
CMCSA |
-1.55% |
7.48% |
|
DISH |
1.44% |
18.85% |
Over the last five trading sessions, share price movement of most of the major telecom stocks witnessed a positive trend barring Comcast. Vodafone gained a significant 4.49% in the same time frame. However, over the last six months, the price performance of most telecom stocks depicts a mixed trend. Among the stocks that gained significantly are Sprint (95.77%), T-Mobile US (36.13%) and DISH Network (18.85%). On the other hand, Vodafone lost 19.41% in the same time period.
What’s Next in the Telecom Space?
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. Consequently, we expect stocks to trade in line with the broader market.
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