Telecom Stock Roundup: Verizon Strengthens Advertising Program, Arris Unveils DOCSIS 3.1 Modems
Not many significant developments were noted in the telecom industry last week. Nevertheless, a few events caught attention, including Verizon Communications Inc.’s VZ decision to merge its existing advertising programs, Relevant Mobile Advertising and Verizon Selects, with AOL Advertising Network, effective Nov 2015. Notably, in Jun 2015, Verizon took over AOL Inc. to consolidate its mobile advertising platform.
Meanwhile, leading cable TV equipment developer Arris Group Inc. ARRS recently introduced two DOCSIS 3.1 cable modems, despite the fact that the next-generation DOCSIS 3.1 standard is yet to be fully certified by the industry consortium – CableLabs. The DOCSIS 3.1 technology theoretically offers 10 Gbps downstream and up to 1 Gbps upstream network capabilities. Arris claims its two modems will initially support 5 Gbps downstream and 2 Gbps upstream speed.
U.S. telecom giant AT&T Inc. T finally launched its Wi-Fi Calling feature after it received the green signal from the Federal Communications Commission in this regard. The launch had been delayed as the FCC required the feature to support teletypewriter service (TTY) which assists the hearing-impaired. However, for now, the feature will be solely available to customers using iPhones with iOS9. Support for other phones is expected to be made available later.
On the other hand, Qualcomm Inc. QCOM, the market leader in mobile chipsets, is the latest entrant in the server market, an area presently dominated by Intel Corp. INTC. The company has unveiled a ‘Server Development Platform’ to start testing its ARM-based chipset in a number of data centers across the globe, powered by a pre-production 24 core ARM-based custom CPU. Further, the companyhas decided to vend its Augmented Reality (AR) business, Vuforia, to PTC Inc. PTC.
Additionally, satellite TV operator DISH Network Corp. DISH and leading TV broadcaster TEGNA Inc. TGNA have finally reached a multi-year carriage agreement. This fresh contract puts an end to the almost two-day blackout of TEGNA’s 46 local TV channels on DISH’s network in 39 markets across 33 states and the District of Columbia.
Outside the U.S., Nokia Networks, a division of Nokia Corp. NOK recently won a key contract to supply its latest TDD-LTE-A (Time Division Duplex Long-Term Evolution – Advanced) technology to China Mobile Ltd. CHL. Notably, China Mobile is the largest wireless operator in the world in terms of subscriber count.
(Read the last Telecom Stock Roundup for Oct 8, 2015.)
Recap of the Week’s Most Important Stories
1. Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. The company’s existing ad programs collect personal data related to its users, which the company will now share with its subsidiary AOL. The combination of these two ad technologies will provide valuable information to advertisers and allow them to effectively post their advertisements on AOL’s web sites as well as through Verizon’s latest Go90 mobile video service. (Read More: Verizon to Boost Advertising Programs with AOL Technology.)
2. Arris has introduced two DOCSIS 3.1 modems. The first is Touchstone CM8200, to be used by those cable TV operators who employ Arris’ legacy products. The second is SURFboard SB8200, designed for Motorola Surfboard brand users. Notably, in 2013, Arris acquired Motorola Home set-top box business from Alphabet Inc. The upcoming DOCSIS 3.1 standard is a better formulation of the existing DOCSIS 3.0 technology. (Read More: Arris Group Leads Next-Generation DOCSIS 3.1 Modem Race.)
3. China Mobile has undertaken a massive project to install 1 million TDD-LTE base stations by the end of this year. Nokia Networks will provide TDD-LTE-A technology based on the Flexi Multi-radio 10 Base Station. This technology will support a wide range of frequency bands. Additionally, Nokia will supply carrier aggregation software for both macro and small cells to combine the various spectrums for faster data transmission and Flexi Zonesmall cells. (Read More: Nokia Networks Wins Key LTE-A Contact from China Mobile.)
4. Qualcomm’s foray into the server market can be deemed a healthy move for the industry. However, one must note that firms like AMD, AppliedMicro and Cavium have also tried to challenge Intel in the past with ARM-based processors, but have failed miserably. Moreover, for the already existing cloud operators, switching to another system could be complicated. On the brighter side, Qualcomm is an experienced player in the ARM business and has sufficient resources for R&D. (Read More: Qualcomm to Lock Horns with Intel; Forays into Server Market.)
5. The settlement of the TEGNA channel dispute comes as a huge relief for DISH as the company, like other pay-TV operators, has been persistently losing video customers. At the end of the second quarter of 2015, DISH had roughly 13.932 million pay-TV subscribers, down 0.9% year over year. Average monthly pay-TV subscriber churn rate in the second quarter was 1.71% compared with 1.66% in the prior-year quarter. A failure to strike a deal with TEGNA might have resulted in further churn and lower average revenue per user. (Read More: DISH Network-TEGNA's Contract Ends Channel Blackout.)
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 | 0.32% | -8.32% |
T | 0.45% | 4.59% |
S | -6.97% | -14.43% |
TMUS | -2.13% | 23.97% |
VOD | -1.03% | -3.35% |
CHL | -1.64% | -12.46% |
AMX | -2.49% | -17.15% |
CMCSA | 0.40% | 2.48% |
DISH | -0.12% | -12.65% |
Over the last five trading sessions, most of the major telecom stocks traded in the red. It was a major setback for Sprint which lost 6.97% during the said period. Likewise, over the last six months, the price performances of key telecom stocks have been mostly negative with the notable exception of T-Mobile US,which gained 23.97% over the same period. America Movil and Sprint lost a significant 17.15% and 14.43%, respectively, over the past six months.
What’s Next in the Telecom Sector?
We expect increased activities in the telecom sector in the next week as U.S. telecom behemoths Verizon and AT&T release their third-quarter 2015 financial results. In Canada, leading telecom operators Rogers Communications and Shaw Communications are also slated to report their earnings numbers. Mexican telecom giant America Movil will also follow suit. The market will closely evaluate the quarterly results in order to assess industry dynamics and future growth prospects.
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AT&T INC (T): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
ARRIS GROUP INC (ARRS): Free Stock Analysis Report
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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TEGNA INC (TGNA): Free Stock Analysis Report
PTC INC (PTC): Free Stock Analysis Report
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