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Telecom Stock Roundup: Verizon to Launch 5G, Qualcomm's U.S. Verdict & More

Supriyo Bose

Telecom stocks witnessed an uptrend for the bulk of last week as the United States and China are reportedly closing toward a landmark trade deal. The U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer are scheduled to travel to Beijing later this week to meet a Chinese delegation led by Vice Premier Liu He for further discussions. As the two countries aim to bridge the trust gap, President Trump upped the ante by hinting that the $250-billion U.S. tariff on Chinese exports will continue to remain suspended even if the deal is inked.

The countries seem eager to walk the extra mile to reach a consensus decision that honors domestic obligations as well as international commitments. The bilateral trade negotiations presently seek to solve some lingering issues on China’s subsidies, cyber theft, public sector enterprises, IP rights and so-called forcible technology transfers. A final date for the formal meeting between the two state heads is yet to be decided as China aims to avoid the humiliation of a failed deal like that of North Korean leader Kim Jong Un. Trump also hinted that the U.S. tariffs will not be withdrawn altogether and will continue to remain suspended in order to maintain pressure on China.

As the industry awaits further clarity on policy issues and its aftereffects with no official statement release, there is an element of uncertainty in the domestic market. Meanwhile, the bill introduced by the Democratic lawmakers in the House and Senate to reinstate the net neutrality rules that the Federal Communications Commission had repealed in 2017, was in cynosure. Titled ‘Save the Internet Act’, the bill aims to discourage blocking or throttling content and consider Internet access as a “utility” under Title II of the Communications Act. The Democratic-led U.S. House of Representatives will vote on the bill in April. Although it is expected to pass the House, stiff resistance is apprehended in the Senate where Republicans hold the majority. Moreover, the bill is likely to be vetoed by Trump as he had been vocally skeptical of net neutrality in the past.

Regarding company-specific news, 5G launch, trial verdicts, strategic hires, product launch and collaborations primarily took center stage over the past five trading days.

Recap of the Week’s Key Stories

1.    Verizon Communications Inc. VZ has upped the ante against its rivals by aiming to launch the 5G Ultra Wideband network in Chicago and Minneapolis on Apr 11. As the company gears up to increase the tally of 5G Ultra Wideband mobility cities to 30 in 2019, it is offering an exclusive 5G moto mod by Motorola Solutions, Inc. MSI to power moto z3 — the world’s first 5G-enabled smartphone — to enable users to fully utilize the network features.

The 5G Ultra Wideband network hinges on three fundamental drivers to deliver the full potential of 5G technology. These include massive spectrum holdings, particularly in the millimeter wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy large numbers of small cells. (Read more: Verizon to Launch 5G in April With Exclusive Moto Mod)

2.    The battle is won, but the war continues for Qualcomm Incorporated QCOM as it received the first favorable U.S. court verdict from a federal judge in San Diego for a long-standing patent dispute against the iPhone manufacturer. Per the judgment, Apple Inc. is liable to pay $31.6 million in damages to Qualcomm for three patent infringements.

Pertaining to a lawsuit filed on Jul 6, 2017, the U.S. District Court for the Southern District of California observed that Apple had unlawfully utilized the patents in some of its iPhone models to add innovative features. (Read more: Qualcomm Gets 3 Favorable Patent Verdicts From U.S. Jury)

3.    AT&T Inc. T is currently focusing on the European markets with new hires as it aims to concentrate on the digital ad market, per media reports. The AppNexus division, which forms an integral part of its advertising unit Xandr, is hiring about 60 persons across the U.K., France, Germany, Spain and Italy to augment the company’s position within the digital ad realm, the reports suggest.

Over the years, AT&T has evolved from a telecom firm to a leading player in the U.S. communications sector with significant media assets. The company now aims to leverage the inherent potential of Xandr and WarnerMedia’s Turner business to offer enriching advertising content and data analysis to customers. (Read more: AT&T Aims to Focus More on European Markets With New Hires)

4.    NETGEAR, Inc. NTGR launched Nighthawk Pro Gaming XR300 WiFi Router at the SXSW Gaming Expo. The networking equipment maker’s latest member in the leading-edge product family has been categorically designed to lessen ping and latency on Xbox, PlayStation, Nintendo Switch, PCs and mobile devices.

Notably, the XR300 router leverages gaming dashboard powered by DumaOS, which is crucial for an augmented online gaming experience. Moreover, with the growing popularity of online games like Fortnite, Apex Legends and PubG, the Nighthawk Pro Gaming Dashboard focuses on Internet speeds for faster online gaming and smoother streaming, while reducing lag with ultra-low ping rates. (Read more: NETGEAR Unveils Gaming Router for Superior Experience)

5.    Ericsson ERIC announced that it has been chosen by TDC — the largest telecommunications company in Denmark — to roll out nationwide commercial 5G as part of the latter’s network overhaul program. Financial terms of the contract were not disclosed. Notably, this Swedish firm has been investing in its competitive 5G-ready portfolio to enable communications service providers to seamlessly migrate to 5G.

Along with R&D innovation, the strengthened partnership is likely to allow TDC to fulfill ‘Digital Denmark’ objectives. This move is likely to empower a digital economy while boosting Denmark’s position as a digital leader by helping mobile broadband subscribers and industries to capitalize on 5G technology, Internet of Things and the fourth industrial revolution. (Read more: Ericsson Collaborates With TDC to Support Digital Denmark)

Price Performance

The following table shows the price movement of some of the major telecom stocks over the past week and the past six months.

In the past five trading days, Qualcomm was the biggest gainer with its stock rising 3.1% while Motorola lost the maximum at 1.7%.

Over the past six months, SBA Communications has been the best performer with its stock appreciating 17.2% while Qualcomm declined the most with its shares falling 28.7%.

Over the past six months, the Zacks Telecommunications Services industry has inched up 0.2% while the S&P 500 fell 2.3%.

What’s Next in the Telecom Space?

In addition to product launches and deployment of 5G technologies, all eyes will be on how the United States and China continue their trade negotiations.

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NETGEAR, Inc. (NTGR) : Free Stock Analysis Report
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