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Telecom Stock Roundup: CTL, TDS and DISH Disappoint in Q3, Mixed Bag for USM, ATUS and CABO

Zacks Equity Research
The last week looked like a bad spell for the telecom sector as most of the major telecom stocks lost value.

The last week looked like a bad spell for the telecom sector as most of the major telecom stocks lost value. Although we did not find any sector specific reason for the downtrend in stock price, it might be due to not-so-impressive results posted by the regional telecom operators and some of the leading pay-TV operators in the third quarter of 2017.

DISH Network Corp. DISH, CenturyLink Inc. CTL and Telephone & Data Systems Inc. TDS reported disappointing financial results in the third quarter of 2017, wherein both the top and the bottom line missed the Zacks Consensus Estimate.

As of Sep 30, 2017, DISH Network had approximately 13.203 million Pay-TV subscribers compared with 13.643 million at the end of third quarter 2016. The company gained net 16,000 pay-TV subscribers but lost 50,000 broadband subscribers in the reported quarter. As of Sep 30, 2017, DISH Network had 459,000 broadband subscribers, down 22.6% year over year.

For CenturyLink, as of Sep 30, 2017, total access lines were 10.506 million, down 6.5% year over year. High-speed broadband customer count was 5.767 million, down 3.1% year over year.

At the end of the third quarter of 2017, Telephone & Data Systems had 575,300 residential wireline connections, down 2.6% year over year. The company exited the third quarter of 2017 with 315,300 commercial wireline connections, down 5.6% year over year. Total cable connections were 300,600, up 3.3% year over year.

United States Cellular Corp. USM and Cable ONE Inc. CABO reported mixed financial results in the third quarter of 2017. The bottom line surpassed the Zacks Consensus Estimate, while the top line missed the same.

As of Sep 30, total customer base of Cable ONE was 796,110, up 21% year over year. Non-video customer base was 359,649, reflecting an increase of 10.9% year over year.

United States Cellular exited the third quarter of 2017 with a subscriber base of 5,089,000 compared with 5,031,000 at the end of 2016. Postpaid subscriber base totaled 4,513,000 compared with 4,482,000 at the end of 2016. Prepaid subscriber base totaled 515,000, compared with 484,000 at the end of 2016.

Leading cable TV operator Altice USA Inc. ATUS alsoreported mixed financial results for the third quarter of 2017, with the bottom line missing the Zacks Consensus Estimate and the top line beating the same. Total customer relationships in the reported quarter were 4.898 million, including 4.529 million connections for the Residential segment and 369 connections for the SMB segment.In the Residential segment, the subscriber count was 3.430 million for Pay TV, 4.021 million for Broadband and 2.547 million for Telephony business.

Liberty Global Plc. LBTYA reported impressive financial results in the third quarter of 2017. Quarterly net loss per share was better-than-the Zacks Consensus Estimate while revenues surpassed the same. In the reported quarter, this leading European quad-play cable MSO (multi-service operator) added a total of 204,400 RGUs, (revenue generating units) including net gains of 132,900 and 102,300 subscribers for broadband Internet and telephony services, respectively.

However, the company lost 30,800 video customers. Liberty Global carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Read the last Telecom Stock Roundup for Nov 03, 2017.

Recap of the Week’s Most Important Stories

1.    DISH Network’s net income was $297.37 million, down from $318.45 million in the year-ago quarter. Third-quarter 2017 adjusted earnings per share of 57 cents lagged the Zacks Consensus Estimate of 60 cents.Total revenues were approximately $3,583.45 million, down 4.9% year over year and below the Zacks Consensus Estimate of $3,597 million. (Read more: DISH Network Lags Q3 Earnings & Revenue Estimates)

2.    Net loss of Altice USA in the third quarter was $182.09 million compared with a net loss of $172.55 million in the prior-year quarter. Adjusted loss was 8 cents per share, wider than the Zacks Consensus Estimate of a loss of a penny. Total revenues of $2,327.18 million increased 3.2 % year over year and surpassed the Zacks Consensus Estimate of $2,326 million. (Read more:  Altice USA Incurs Loss in Q3, Revenues Beat Estimates)

3.    CenturyLink's net income in third-quarter 2017 was $92 million or 17 cents per share compared with $152 million or 28 cents in the year-ago quarter. Adjusted earnings per share of 42 cents missed the Zacks Consensus Estimate of 45 cents. Total revenues in third-quarter 2017 were $4,034 million compared with $4,382 million in the prior-year quarter. Revenues also missed the Zacks Consensus Estimate of $4,061 million. (Read more: CenturyLink Misses Q3 Earnings and Revenue Estimates)

4.    GAAP net loss of United States Cellular came in at $299 million or a loss of $3.51 per share against net income of $17 million or 20 cents per share in the year-ago quarter. However, adjusted earnings per share of 11 cents were well above the Zacks Consensus Estimate of a penny per share. Quarterly total revenues of $963 million declined 6% year over year. Further, it missed the Zacks Consensus Estimate of $976.5 million. (Read more: United States Cellular Q3 Earnings Top, Revenues Lag)

5.    GAAP net loss of Telephone & Data Systems in the reported quarter was $181 million or a loss of $1.64 per share against net income of $13 million or 12 cents per share in the year-ago quarter. Quarterly adjusted earnings per share of 8 cents were well below the Zacks Consensus Estimate of 17 cents. Revenues declined 5% year over year to $1,251 million in the reported quarter, underperforming the Zacks Consensus Estimate of $1,275 million. (Read more: Telephone & Data Systems Q3 Earnings and Revenues Lag)

Price Performance

The following table shows the price movement of the major telecom players in both the last week and last six months.

Company

Last Week

Last 6 Months

VZ

-7.76%

-2.91%

T

0.12%

-11.04%

S

-11.73%

-21.90%

TMUS

-11.04%

-14.50%

CHTR

6.71%

4.82%

TEF

0.80%

-11.34%

AMX

2.08%

12.74%

CMCSA

-0.63%

-6.45%

DISH

8.20%

-17.86%

In the last five trading sessions, share price movement of the major telecom stocks witnessed a mixed trend. Barring AT&T, all three U.S. national telecom carriers, Verizon, T-Mobile US and Sprint lost significant value in the last week. However, leading pay-TV operators like Charter Communications and DISH Network gained substantially in the same time frame.

Meanwhile, price performances of most of the major telecom stocks were negative in the last six months. While America Movil gained substantially, Sprint, DISH Network, T-Mobile US, AT&T and Telefonica lost significantly 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 movement.

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Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report
 
DISH Network Corporation (DISH) : Free Stock Analysis Report
 
Liberty Global PLC (LBTYA) : Free Stock Analysis Report
 
Cable One, Inc. (CABO) : Free Stock Analysis Report
 
CenturyLink, Inc. (CTL) : Free Stock Analysis Report
 
United States Cellular Corporation (USM) : Free Stock Analysis Report
 
Altice USA, Inc. (ATUS) : Free Stock Analysis Report
 
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