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Telecom Stock Roundup: AT&T to Raise Unlimited Data Plan Price, Qualcomm Faces Anti-Trust Suit

Last week has been pretty eventful for the telecom industry. Qualcomm Inc. QCOM, the largest globally mobile chipset manufacturer using baseband technology, faced an anti-trust lawsuit from the U.S. Federal Trade Commission (FTC). The regulator filed a lawsuit with the U.S. District Court for the Northern District of California on grounds that the company resorted to anticompetitive measures to maintain monopolistic hold in the baseband chipset market.

According to a recent report by FierceWireless, U.S. telecom and pay-TV behemoth AT&T Inc. T announced a rate hike of $5 a month for users who still avail its old unlimited data plan. This hike lifts the monthly plan price to $40, effective Mar 2017.The latest raise can be seen as a follow-up to the telco’s price hikes last year. On Nov 30, 2015, AT&T announced a $5 hike for its legacy unlimited data plan, pushing the total to $35, effective Feb 2016.

Per a recent report by FierceWireless, U.S. telecom giant Verizon Communications Inc.  VZ started using the service of some exclusive dealer’s network for its prepaid wireless offerings. So far,  the company has launched five stores, two in Las Vegas and Phoenix areas, and one in Socorro, TX. Notably, all of these stores are run by a dealer known as My Peak Wireless.

Moreover, Verizon has introduced FiOS Instant Internet service offering 750 Mbps speed from Jan 14, 2017. The service will be available to nearly 7 million homes and businesses which are under the FTTH (fiber-to-the-home) footprint of the company in greater New York City / northern New Jersey, Philadelphia and Richmond. After the launch, the service will be available in portions of Boston and Norfolk in the later part of first-quarter 2017.

Meanwhile, regional telecom service provider Cincinnati Bell Inc. CBB is planning to hire 300 more employees at its universal call centers to enhance customer service. The telco currently has more than 100 locally based universal call center agents assisting its customers. This is a milestone for a company that started with only 20 agents in early 2016. Cincinnati Bell currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outside the U.S., Mexican pay-TV and broadcasting behemoth, Grupo Televisa S.A. TV, is likely to gain significantly from its ownership stake in U.S. broadcaster Univision Communications Inc., the largest privately held Spanish-language broadcaster in the U.S. As per a recent report by TheStreet, the owners of Univision are seriously considering an initial public offering (IPO) for the company in 2017.

On the earnings front, leading Canadian telecom operator Shaw Communications Inc. SJR reported weak financial results for the first quarter of fiscal 2017 (ended Nov 30, 2016) wherein the bottom line missed the Zacks Consensus Estimate. Adjusted earnings per share came in at 13 cents in the quarter, missing the Zacks Consensus Estimate of 23 cents.Total revenue was $1.313 billion, reflecting an increase of 14.9% from $1.143 billion in the year-ago quarter.

Further, Shaw Communicationshas decided to launch an innovative voice-controlled television product in a bid to regain market share in the western parts of Canada. Notably, this innovative TV product is powered by U.S. cable MSO and media giant Comcast Corp.'s CMCSA X1 technology.

Read the last Telecom Stock Roundup for Jan 12, 2017.

Recap of the Week’s Most Important Stories

1.    The FTC said Qualcomm had established an exclusivity agreement with iPhone and iPAD maker Apple from 2011 to 2016. Through this deal the San Diego-based chipmaker provided billions of dollars in license rebates to Apple subject to the condition that Apple would not use chipset of Qualcomm’s rival companies. The company recognized that any competitor that won Apple’s business would become stronger, and used exclusivity of the deal to prevent the latter from working with and improving the effectiveness of its competitors. (read more: Qualcomm Faces Anti-trust Charges From the FTC.)

2.    AT&T’s unlimited data plan was originally a tool to encourage people to get an iPhone during the early days of the modern smartphone era. But AT&T stopped offering its unlimited data service to new customers in 2010, replacing it with a layered pricing model. The move was taken as a result of the operator’s failure to meet increasing demand for data among the carrier's growing iPhone customer base in the U.S. (read more:  AT&T to Raise Unlimited Data Plans' Prices Again in '17.)

3.    Verizon is attempting to boost prepaid market share through dealer’s network and has decided to launch several data plans in the price range of $50 - $70. In the third quarter of 2016, the company added a net 83,000 prepaid wireless subscribers compared with a loss of 80,000 in the year –ago quarter. At the end of the reported quarter, Verizon had 5.456,000 prepaid customers. (read more:  Verizon Opts for Dealer's Network for Prepaid Service.)

4.    Shaw Communications has been using Comcast’s technology since 2015. In Jun 2015, the company abandon its own IPTV platform development project (after writing-down CS$55 million) and instead licensed Comcast’s cloud-based X1 platform. Comcast’s web-capable X1 platform offers a hybrid IP/QAM video gateway with an advanced user interface and the ability to port third-party apps that tie into a cloud-based infrastructure. X1 is a cloud-based TV guide and includes recommended web videos as well as a new mobile application. (read more:  Shaw Communications to Focus on Comcast's X1 Technology.)

5.    Univision is the fifth largest TV network in the U.S. The company’s portfolio consists of two leading Spanish-language broadcast networks, several cable channels, TV stations and a chain of popular Spanish-language radio stations. Currently, a considerable share of Televisa’s income is generated from its U.S. operations, which includes the sale of content, website and cable TV. Televisa allows Univision to access its content and then rebroadcast it on TV and the Internet for a royalty. (read more:  Grupo Televisa Poised to Gain from Probable Univision IPO.)

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

0.44%

-6.19%

T

0.37%

-4.61%

S

-0.23%

93.14%

TMUS

0.15%

32.18%

VOD

-0.88%

-18.02%

CHL

1.54%

-7.05%

AMX

-3.05%

-1.35%

CMCSA

1.95%

7.75%

DISH

-0.37%

17.78%

Over the last five trading sessions, share price movement of most of the major telecom stocks witnessed a mixed trend. America Movil lost a significant 3.05% in the same time frame. Likewise, over the last six months, the price performance of most telecom stocks depicts a mixed trend. Among the stocks that gained significantly are Sprint (93.14%), T-Mobile US (32.18%) and DISH Network (17.78%). On the other hand, Vodafone lost 18.02% in the same time period.

What’s Next in the Telecom Space?

We expect a busy week ahead for the telecom sector as behemoths like Verizon and AT&T are slated to release fourth-quarter 2016 results. Qualcomm will also report its first quarter of fiscal 2017 results. Further, leading wireless tower operator Crown Castle International will come up with its fourth-quarter results. The market will closely evaluate these results in order to assess industry dynamics and future growth prospects.

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Qualcomm Inc. (QCOM): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Cincinnati Bell Inc. (CBB): Free Stock Analysis Report
 
Verizon Communications Inc. (VZ): Free Stock Analysis Report
 
Grupo Televisa SAB (TV): Free Stock Analysis Report
 
Shaw Communications Inc. (SJR): Free Stock Analysis Report
 
Comcast Corp. (CMCSA): Free Stock Analysis Report
 
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