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Telecom Stock Roundup: Viasat-Delta Ink Deal, Iridium Launches Edge Solar & More

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·8 min read
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Buoyed by the renewed optimism over the coronavirus vaccine rollout, the U.S. telecom stocks witnessed a relatively steady performance for most of the past week. Moreover, with President Trump signing the bipartisan aid package worth $2.3 trillion after initial rebuffs, the industry appeared to have gained a sense of stability moving into 2021. The bill included a provision for $1.9 billion funding to remove telecommunications equipment from firms that allegedly pose national security risks. The industry further witnessed a steep uptrend at the end of the past week as the FCC-run auction for 5G airwaves made records with combined bidding surging past $76.5 billion — well ahead of the previous best of about $45 billion in 2015.   

The auctioning of some of the airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum — widely known as the C-band — is likely to bring the United States at the forefront of the 5G race and thwart the increased 5G dominance of South Korea and China. The Auction 107 is offering 280 MHz of spectrum in the 3.7-3.98 GHz band that is likely to provide key mid-band spectrum for potential 5G deployments in the next few years. The C-Band offers significant bandwidth with better propagation characteristics compared with mmWave, which has a relatively shorter range and requires a high density of sites to achieve optimum coverage. Consequently, the airwaves are deemed to be prized assets for carriers that lack considerable mid-band spectrum holdings.

About 57 bidders are participating in the go-for-broke auction that is likely to continue for few more weeks. At a time when the global economy is hard hit by the coronavirus pandemic, the momentous interest in the auction signifies that bidders are willing to spend more money on 5G spectrum with solid ROI potential. The auction is widely expected to unlock superfast 5G networks covering wide swaths of the country, thereby generating healthy revenues that are likely to offset the high auctioning expenses.

Meanwhile, the NYSE flip-flopped on a proposal to delist 35 China-based companies, including three telecom firms China Mobile, China Telecom, and China Unicom in compliance with a November executive order by Trump to ban all trading with these entities from Jan 11, 2021. The firms were alleged to have close ties with the Chinese military and were deemed to be national security threats. The proposed move further strained the estranged bilateral relationship and put forth a big test for three of the largest telecoms in the world, with a combined market value of $156 billion. However, it later made a dramatic U-turn and rescinded the decision, only to revert to the original decision of delisting the stocks probably due to prod by the U.S. Treasury Department.

Regarding company-specific news, deals, product launch, acquisitions and collaborations primarily took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.     In a growing testament to the gradual revival of the airline industry from the COVID-19 setback, Viasat Inc. VSAT has secured a prime contract for Ka-band satellite in-flight connectivity (“IFC”) solutions from Delta Air Lines, Inc. for an undisclosed amount. The improved IFC services will aim to offer enhanced Internet capabilities with best-in-class in-flight entertainment options to entice customers and will likely contribute to the uptrend in leisure air-travel demand.

Per the deal, Delta Air will use Viasat’s Ka-band IFC solutions in more than 300 mainline narrow-body aircraft with an option to add additional fleet within the service coverage. The solutions are likely to be available onboard starting this summer and will be compatible with the entire fleet of satellites. These include the first-generation spacecraft and partner satellites, second-generation spacecraft ViaSat-2, and the forthcoming ViaSat-3 class of satellites. Notably, the ViaSat-3 platform will help to form a global broadband network with nearly eight times more network capacity than its existing fleet to enable high-quality, high-speed Internet and video streaming service.   

2.     Iridium Communications Inc. IRDM has augmented its portfolio for remote asset tracking, monitoring and management solutions with the commercial launch of Edge Solar — a solar-powered, intelligent, secure, and maintenance-free device. This unique and versatile IoT tracking device is likely to strengthen its leading position in the market, unlocking solid revenue-generating opportunities.

The Iridium Edge Solar is a standalone and programmable, solar-powered device with Bluetooth capability for wireless sensor integration and local device connectivity. It offers real-time GPS tracking with two-way communication and remote configuration capabilities. This self-charging product leverages over-the-air configuration capabilities and is ideal for Vessel Monitoring Systems, fisheries management, tracking of freight shipping containers, monitoring of oil and gas pipelines and heavy equipment telematics data reporting.

3.     In order to boost its market presence, T-Mobile US, Inc. TMUS recently inked a definitive agreement to acquire the Sprint-branded wireless assets of Brookings Municipal Utilities (“BMU”) in Brookings, SD, for an undisclosed amount. The acquisition, subject to mandatory closing conditions and regulatory approvals, is likely to close in the first quarter of 2021.

Per the deal, T-Mobile will gain BMU’s wireless network, retail stores and PCS (Personal Communications Services) spectrum in the 1850 – 1990 MHz band that served approximately 14,000 customers in Sioux Falls, Watertown, and Brookings, SD and Sioux City, IA. Notably, Sprint was the pioneer of PCS spectrum in the United States and was used for the initial deployment of LTE technology. The buyout will expand T-Mobile’s retail distribution network in the region  while extending its network coverage and subscriber base.

4.      Ericsson ERIC has strengthened its long-standing partnership with Ooredoo Group by inking a five-year agreement with it for the supply of 5G radio, core and transport products and solutions. Ericsson currently has 77 live 5G networks in 40 countries and 122 commercial 5G agreements with service providers.

This agreement covers all 10 of the Group’s operating companies in Qatar, Indonesia, Algeria, Iraq, Kuwait, Oman, Palestine, Tunisia, Myanmar and Maldives. The deal includes Ericsson Radio System, Ericsson Cloud Core, Cloud Infrastructure and Ericsson Cloud Communication solutions.  

5.      In a bid to curb the rising incidences of cyber threats, Motorola Solutions, Inc. MSI has announced the inclusion of additional services to its cybersecurity services portfolio. The expansion is primarily aimed at safeguarding mission-critical operations of various public safety agencies and enterprises against malicious activities like data breaches.

Notably, the extended portfolio will capitalize on recent acquisitions of Lunarline, a cybersecurity services company with expertise in Federal Risk and Authorization Management Program, and Delta Risk, a leading managed security services provider that will aid Motorola to pursue strategic investments and bolster product innovation with an augmented cybersecurity market globally. Driven by Motorola’s public safety leadership, the latest move is expected to significantly boost the mission-critical ecosystem of the company with greater agility.

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, Juniper has been the best performer with its stock gaining 5.9%, while T-Mobile was the biggest decliner with its stock falling 1.3%.

Over the past six months, Qualcomm has been the best performer with its stock appreciating 38.1%, while AT&T was the sole decliner with its stock falling 2.1%.

Over the past six months, the Zacks Telecommunications Services industry has rallied 2.7% on average and the S&P 500 has gained 18.4%.



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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