Telecom Stock Roundup: Motorola Boosts Public Safety, Juniper Buys Apstra & More
The U.S. telecom stocks witnessed a sedate start to the past week but gradually picked up steam on renewed optimism relating to additional fiscal stimulus by the government to negate the lower-than-expected November job growth data. The latest data released by the Bureau of Labor Statistics revealed that although the unemployment rate improved to 6.7%, the U.S. economy added only 245,000 jobs compared with broad-based expectations of 469,000 additions. With President-elect Joe Biden lending his support for adequate financial backing to stem further rot in the economy, the odds of a new stimulus package were raised higher. This largely fueled the stock market rally and catapulted leading benchmark indices to trade near historic highs. The trend was mirrored by the telecom industry as well.
The telecom stocks were further buoyed by the latest auction of the C-Band, which is offering 280 megahertz of spectrum in the 3.7-3.98 GHz band. The much anticipated Auction 107 will offer key mid-band spectrum for potential 5G deployments in the next yew years and is likely to bring the United States in the forefront of the 5G race. The C-Band offers significant bandwidth with better propagation characteristics compared with mmWave, which has a short range and requires a high density of sites to achieve coverage. Consequently, it is deemed to be a prized asset for carriers that lack considerable mid-band spectrum holdings. However, some lawmakers have urged the Federal Communications Commission (“FCC”) to exercise caution as the airwaves are expected to affect the nearby aviation frequency band. The FCC has dismissed the concerns by arguing that there would be sufficient buffer between the spectrum used by 5G and the altimeters aboard aircraft, enabling them to safely co-exist.
Meanwhile, a federal judge has dealt another blow to the Trump administration relating to the ban of China-based TikTok. Federal judge Carl Nichols of the U.S. District Court in Washington, DC has blocked the economic sanctions against TikTok and observed that the government “likely overstepped” its jurisdiction to enforce such restrictions. Notably, the White House is seeking a ban on TikTok, WeChat and other Chinese apps that are allegedly being used as cyber espionage tools to gain access to sensitive American data. However, an appeals court recently rejected a government appeal seeking immediate ban of such downloads from U.S. app stores. This has offered an opportunity to the video sharing app to continue operating in a country with more than 100 million users.
Regarding company-specific news, collaborations, deals, acquisition and 5G deployment primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Motorola Solutions, Inc. MSI has inked an agreement with Verizon Communications Inc. to introduce an innovative mission-critical push-to-talk solution for an interoperable broadband communication gateway for first responders. Dubbed Group First Response, the solution leverages Verizon’s LTE network to facilitate end users to communicate seamlessly via voice, data and video across various compatible devices, thereby augmenting public safety measures.
Based on 3rd Generation Partnership Project (3GPP) standards for mission-critical push-to-talk (MCPTT) communication, Group First Response can be integrated with Motorola’s land mobile radio (LMR) systems to extend their coverage. The 3GPP standards are geared toward high quality network connectivity as well as secure radio access technologies for delivering mission-critical data. In addition to complementing LMR network capabilities through multimedia messaging and live video streaming, it further provides MCPTT functionality beyond LMR networks for faster and effective response by first responders.
2. In a concerted effort to redefine the data center operations and boost intent-based networking in the cloud era, Juniper Networks Inc. JNPR has inked a definitive agreement to acquire California-based software firm Apstra for an undisclosed amount. The acquisition is likely to fortify its leading market position within the networking market and optimize operations in multivendor environments.
With the acquisition of this intent-based networking firm, Juniper aims to augment its capabilities within open programmability by extending Apstra’s closed loop automation and analytics to customers independently of their underlying infrastructure. The transaction is expected to be dilutive to earnings in the first half of 2021 and breakeven in the full year, while being accretive to non-GAAP earnings in 2022.
3. Qualcomm Incorporated QCOM has announced the deployment of 5G millimeter Wave (mmWave) network at South Korea’s Kumoh National Institute of Technology in collaboration with LG Uplus and LG Electronics. The latest initiative, directed at bolstering the commercialization of 5G mmWave globally, is touted as the first deployment in the East Asian country.
The innovative technologies provided by these tech behemoths will be utilized to revamp the education process in the South Korean university on the back of avant-garde solutions like artificial intelligence and remote connectivity. The recent rollout marks a significant milestone in not only showcasing the benefits of 5G mmWave technology but also highlighting its commercialization in South Korea for an advanced connectivity infrastructure.
4. Nokia Corp. NOK has expanded its long-standing business relationship with SoftBank Group Corp. The company’s cloud-native, 5G core software has been selected by SoftBank for the launch of its standalone 5G services. Nokia currently has 133 commercial 5G deals with operators.
Nokia’s 5G core will provide automation and optimization of the entire life cycle management of SoftBank’s networks. The Cloud Packet Core fully integrates with a service provider’s own platform solutions for flexible deployment choices. The solution integrates fixed wireline access into the 3GPP cloud-native core architecture for wireless and fixed convergence.
5. Viavi Solutions Inc. VIAV recently announced that it has entered into a licensing agreement with manufacturer of optical low-pass and infrared cut filters — Viko (Dongguan) Optics Technical Co., Ltd. — to enable the latter to leverage its low angle shift filters, which are used in 3D sensing technology. Details related to this deal have not been disclosed.
Markedly, the partnership with the China-based firm is likely to strengthen Viavi’s Optical Security and Performance Products segment, driven by its growing customer base, product diversification and technological innovations.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, AT&T has been the best performer with its stock gaining 7.5%, while T-Mobile was the biggest decliner with its stock falling 1.5%.
Over the past six months, Qualcomm has been the best performer with its stock appreciating 46.1%, while Juniper was the sole decliner with its stock falling 6.2%.
Over the past six months, the Zacks Telecommunications Services industry has rallied 11.3% on average and the S&P 500 has gained 22.2%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the administration continues to safeguard the interests of domestic telecom firms from perceived Chinese threats.
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Nokia Corporation (NOK) : Free Stock Analysis Report
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