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Telecom Stock Roundup: Verizon, Qualcomm, Ericsson Close FDD Massive MIMO Trial

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The U.S. telecom industry remained rather subdued last week. Very few developments took place in the Christmas/New Year week.

The U.S. telecom industry remained rather subdued last week. Very few developments took place in the Christmas/New Year week. We will briefly mention those events.

Verizon Communications Inc. VZ, Ericsson AB ERIC and Qualcomm Technologies, Inc., a subsidiary of Qualcomm Inc. QCOM, recently completed the first successful FDD (Frequency Division Duplexing) Massive MIMO (Multiple Input-Multiple Output) trial with a fully-compatible customer device.

The trial was completed using Ericsson’s latest Massive MIMO software and hardware and Verizon’s wireless network on a mobile test device. The test device was powered by Qualcomm Snapdragon 845 chipset (which was equipped with the X20 LTE modem). The modem supports the Transmission Mode 9 (TM9) technology which is compatible with Massive MIMO. The tests were conducted in Irvine, CA.

Windstream Holdings Inc. WIN has inked a deal to acquire MassComm, Inc., a privately held, New York-based competitive local exchange carrier (CLEC). The proposed deal will be an all-cash transaction, wherein the leading local exchange carrier will purchase all the issued and outstanding shares of MassComm. On completion, MassComm will become a wholly-owned subsidiary of Windstream.

Liberty Interactive Corp.’s QVCA QVC division recently completed the acquisition of the remaining 61.8% of the home-shopping platform HSN Inc. in an all-stock deal worth $2.1 billion. The newly combined company will have $14 billion in revenues and 23 million customers across the world.

The merged entity will result in the third-largest online site, behind Amazon.com Inc. AMZN and Wal-Mart Stores Inc.’s WMT e-commerce business. Liberty Interactive currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, Liberty Global plc LBTYA also completed the spin-off of its Latin American and Caribbean operations into a new, independent, publicly traded company, Liberty Latin America Ltd., which was previously a unit of Liberty Global under the LiLAC Group. The spin-off transformed each share of the LiLAC Group tracking stock into equity shares of the new company’s common stock.

In a separate development, Altice USA Inc. ATUS and Starz Inc. reportedly failed to ink a new programming deal on the New Year’s Eve. This led to the blackout of 17 Starz, StarzEncore and MoviePlex premium channels in Altice USA’s Optimum and Suddenlink cable TV services.

Read the last Telecom Stock Roundup for Dec 27, 2017.

Recap of the Week’s Most Important Stories  

1.    Massive MIMO is a vital component of 4G LTE Advancements and is likely to play a major role in the evolution of 5G technology. Accordingly, the deployment of Massive MIMO antenna setups will prepare the network for the upcoming next-generation 5G deployment. With TM9 functionality, Massive MIMO has the potential to improve the performance of the LTE network, maintain signal stability and thus enhance overall customer experience with higher speeds. (Read more: Verizon, Qualcomm & Ericsson Complete Massive MIMO Trial)

2.    The buyout of MassComm will boost Windstream’s expanding fiber-based network. Moreover, MassComm’s existing customers can avail Windstream’s broader on-net portfolio of network access options, which are provided to support software-defined wide-area network (SD-WAN) and other managed services. (Read more: Windstream to Acquire MassComm, Boost Fiber Suite)

3.    The acquisition of HSN will provide increased scale and competitive position for the QVC unit. It will also generate synergies through cost reduction and revenue growth opportunities. Further, it will increase the development of eCommerce, mobile and OTT (over-the-top) platforms. (Read more: Liberty Interactive Acquires HSN, Boosts Online Portfolio)

4.   Liberty Latin America will now operate as a leading telecommunications company in 20 countries including Chile, Puerto Rico, the Caribbean and other parts of Latin America, under the consumer brands VTR, Flow, Liberty, Mas Movil and BTC. It will cover 6.4 million homes, serving 5.3 million revenue generating units  and 3.7 million mobile subscribers. The newly-formed company will have $3.7 billion in annual revenues. (Read more: Liberty Global Spins Off Latin American Business)
5.     Due to declining viewership and lesser popularity, Altice USA is likely to drop extra charges from customers for Starz programming. Also, the programs are available directly through Starzs' own OTT service. On the other hand, Starz blamed Altice USA of demanding a drastic reduction in carriage price, compared with the market. The failure to ink a new carriage deal implies tense talks between the companies over how much the cable operator should pay to continue offering the premium channels to customers. (Read more: Altice USA Drops Starz Channels on Declining Viewership)

Price Performance

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

Company Last Week Last 6 Months
VZ -1.45% 16.51%
T -3.31% -1.21%
TMUS -0.02% 6.02%
S -4.43% 27.61%
TEF 0.62% -6.77%
AMX 1.86% 8.61%
CMCSA -0.91% 5.34%
CHTR 4.38% 7.41%
DISH 1.71% -21.50%

In the last five trading sessions, share price movement of most of the major telecom stocks witnessed a mixed trend. Sprint and Charter Communications gained significantly in the same time frame. Similarly, price performances of most of the major telecom stocks were mixed in the last six months. Sprint and DISH Network suffered major reverses in the stock price, while Verizon gained attractively 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.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Ericsson (ERIC) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Liberty Global PLC (LBTYA) : Free Stock Analysis Report
Liberty Interactive Corporation (QVCA) : Free Stock Analysis Report
Wal-Mart Stores, Inc. (WMT) : Free Stock Analysis Report
Windstream Holdings, Inc. (WIN) : Free Stock Analysis Report
Altice USA, Inc. (ATUS) : Free Stock Analysis Report
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