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Telecom Stock Roundup: Verizon to Densify Small-Cells, Comcast Partially Acquires Icontrol

Zacks Equity Research

The telecom industry witnessed strong performances by most of the key stocks last week. A few developments even made the headlines.

As per a recent FierceWireless report, U.S. telecom behemoth Verizon Communications Inc. VZ is planning to deploy small cells – both low power and high power – using the 3.5 GHz or Citizens Broadband Radio Services (CBRS) band.The CBRS Allianceis is an association working toward defining standards that would allow wireless carriers, enterprises, venue owners and others to deploy LTE networks in the 3.5 GHz band.

Moreover, Verizon has come up with some exciting plans for its wireless customers. The company has decided to offer free data for FiOS cable TV service to all Verizon Wireless customers. This implies that anyone utilizing Verizon’s wireless mobile data plan and FiOS Internet and cable TV plan is eligible to stream live channels and on-demand shows through the updated FiOS Mobile app, with unlimited data.

On the other hand,on Mar 13, FierceTelecom reported that Verizon faced a legal notice from the city of New York in relation to its FiOS rollout in the city. The company was accused of failing to meet the 3.3 million estimated services as committed it in 2008. Reports state Verizon’s FiOS rollout has reached only 2.2 million households in New York.

Recently, Comcast Corp. CMCSA has concluded its proposed acquisition of certain useful assets of Icontrol Networks Inc., a major developer of Internet-of-Things (IoT) and smart-home products.Comcast has acquired Icontrol’s Zigbee-based smart home products and the majority of its patents.

Further, Alarm.Com Holdings Inc. ALRM has acquired a minor part of the Z-wave product portfolio together with a handful of patents and the Piper home monitoring assets that Icontrol acquired in 2014.Comcast currently carries a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, U.S. telecom giant AT&T Inc. T has launched two new prepaid GoPhone plans, one with unlimited data and another with 6GB data. AT&T’s GoPhone customers can avail the unlimited data for $60 a month and the 6GB broadband data for $40 a month after signing for AutoPay. The Unlimited GoPhone offering comes in the form of an annual contract-free or credit free.

As per a recent FierceCable report, AT&T is likely to resolve its DirecTV’s deceptive advertising lawsuit filed by the Federal Trade Commission (FTC) in Mar 2015. In addition, United Technologies Corp. UTX, recently collaborated with AT&T to incorporate the latter’s wireless connectivity on commercial HVAC (heating, ventilation and air conditioning) equipment in Smart Service solution. 

Mexican telecom behemoth America Movil SAB AMX recently declared that the Mexican telecom regulatory authority has stepped up antitrust rules against the company. The IFT wants America Movil to separate out a large part of its fixed-line infrastructure. Notably, America Movil has both wireline (Telmex) and Wireless (Telcel) operations.Notably, the Mexican telecom market has become intensely competitive of late. Beside incumbent firm Telefonica SA TEF, U.S. telecom behemoth AT&T has entered into the fray.

Read the last Telecom Stock Roundup for Mar 09, 2017.

Recap of the Week’s Most Important Stories

1.    Verizon is actively working with multiple vendor partners and testing 3.5 GHz equipment this year in both lab and field tests. The company’s officials mentioned that they have already conducted infrastructure testing. Subject to the availability of the spectrum access server (SAS), commercial-grade network equipment and capable devices, further testing is expected to be completed by early 2018  (read more: Verizon to Deploy Small Cells Using 3.5GHz As Per FCC Norms).

2.    Recently, Verizon publicized that it will offer FiOS service as a prepaid plan called FiOS Prepaid. Verizon FiOS is basically a bundled service that includes access to Internet, telephone and television over a fiber-optic communications network with over five million customers in nine U.S. states. Verizon’s FiOS Prepaid comes in the form of contract-free and credit-check-free or deposit-free means to avail the trio of Verizon’s FiOS services (read more: Is Verizon Zero-Rating its Data on FiOS Mobile App?).

3.    Comcast stated that Icontrol’s Zigbee-based smart home products will provide the backbone of the cable TV operator’s Xfinity Home service portfolio. At present, Comcast licenses its X1 video platform to other cable TV operators. Besides expansion into the wholesale market, Comcast will look forward to use new smart home assets from Icontrol to broaden its role in the emerging IoT space (read more: Comcast Completes Partial Acquisition of Icontrol Networks).

4.    AT&T’s GoPhone Unlimited plan allows unlimited usage of data, calling and texting in and between the U.S., Mexico and Canada without any additional roaming charges. All AT&T GoPhone monthly plans come with Multi-Line discounts. Notably, multi-line is ideal for families and small businesses seeking flexibility to add or remove lines without a penalty (read more: Is AT&T Going Unlimited with its Contract-Free GoPhone?).

5.    In 2014, the government of Mexico introduced major reforms within telecommunications sector. The IFT identified America Movil as a dominant player in this market. Both Telmex and Telcel control nearly 70% of the Mexican market. As per the IFT’s reformed norms, the maximum hold of a company in the market has been restricted to 50%. Recently, the IFT has evaluated the stringent measures that were imposed on the company on Mar 2014 (read more: America Movil to Face Tough Antitrust Rules in Mexico).

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

2.04%

-3.35%

T

1.45%

5.95%

S

3.21%

30.23%

TMUS

2.49%

35.32%

CHTR

0.84%

22.35%

TEF

2.14%

8.39%

AMX

3.67%

18.48%

CMCSA

1.23%

14.53%

DISH

-1.63%

21.26%

Over the last five trading sessions, share price movement of most of the major telecom stocks was positive barring DISH Network. America Movil (3.67%) and Sprint (3.21%) gained significantly in the same time frame. Similarly, over the last six months, the price performance of most of the major telecom stocks was predominantly positive. Among the stocks that gained substantially are T-Mobile US (35.32%), Sprint (30.23%), Charter Communications (22.35%), DISH Network (21.26%), America Movil (18.48%) and Comcast (14.53%).

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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AT&T Inc. (T): Free Stock Analysis Report
 
Telefonica SA (TEF): Free Stock Analysis Report
 
Verizon Communications Inc. (VZ): Free Stock Analysis Report
 
Comcast Corporation (CMCSA): Free Stock Analysis Report
 
United Technologies Corporation (UTX): Free Stock Analysis Report
 
America Movil, S.A.B. de C.V. (AMX): Free Stock Analysis Report
 
Alarm.com Holdings, Inc. (ALRM): Free Stock Analysis Report
 
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