Credit: Shutterstock photoThe past week witnessed several key developments within the telecom industry.
U.S. telecom giant Verizon Communications Inc. VZ) is likely to start an online TV streaming service this summer, according to a recent Bloomberg report. The company has decided to come up with dozens of channels nationwide for the new service. Management is currently negotiating with several TV network owners to secure online streaming rights.
Moreover, Verizon is planning to unite AOL Inc. with Yahoo Inc.'s YHOO core Internet assets under one umbrella called - Oath.Notably this news too was brought to light by Bloomberg . Oath is expected to be Verizon's new company overseeing Yahoo and AOL, including more than 20 brands.
U.S. telecom giant AT&T Inc. T was recently selected by the First Responder Network Authority (FirstNet) to build and manage the first nationwide broadband network dedicated to America's police, firefighters and emergency medical services. The network will cover all 50 states, five U.S. territories and the District of Columbia, including rural communities and tribal lands in those states and territories.AT&T's consortium to deploy FirstNet includes Motorola Solutions Inc. MSI , General Dynamics Corp. GD , Sapient Consulting and Inmarsat Government.
Recently, AT&T consolidated its federal, state and local public sector operations into one Global Public Sector organization. Kay Kapoor, the company's key executive of the federal business division, will head the new organization.AT&T's Public Sector sales were nearly $15 billion in 2016. Per a recent FierceCable report, AT&T's subsidiary DIRECTV has lost access to 12 local channels owing to subscription fee-related disputes with Lilly Broadcasting L.L.C. AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Meanwhile, leading cable MSO (multi service operator) and media and entertainment firm, Comcast Corp. CMCSA has decided to offer Xfinity Internet Services in form of a prepaid plan called Xfinity Prepaid Internet Service to all its Xfinity users in its network, with 10 Mbps download speed and 1 Mbps upload speed.Comcast's Xfinity Prepaid Internet Service comes as a 'pay-as-you-go' offering, along with a partnership with Sprint Corp.'s S Boost Mobile prepaid brand.
Recently, leading cable MSO Charter Communications Inc. CHTR received some respite after telecom regulator Federal Communications Commission (FCC) voted to reverse a stringent condition imposed by the previous regime under Obama administration. The telecom regulatory bodydropped overbuild requirement for high-speed broadband network as a precondition for the company's previous acquisitions of Time Warner Cable and Bright House Networks LLC.
Read the last Telecom Stock Roundup for Mar 30, 2017 .
Recap of the Week's Most Important Stories
1. Verizon offers fiber-optic based FiOS TV services to residential customers. This service is similar to that of cable TV operator's traditional video offerings. In 2015, the company launched go90, a YouTube-like streaming-video service aimed at teenagers. However, the new online streaming video service will be separate from the previous two offerings as it will compete with established low-cost streaming video services. (Read more: Is Verizon Considering Online TV Streaming Service Launch? )
2. As part of the 25-year contract, FirstNet will provide AT&T with a swath of 20 MHz of spectrum in the 700 MHz frequency band for the entire duration. AT&T will also be given success-based payments of $6.5 billion over the next five years to design and build the network. The company is expected to spend around $40 billion over the life of the contract to build, deploy, operate and maintain the network. AT&T has projected that this contract will create more than 10,000 jobs over the next two years. (Read more: AT&T Wins Nationwide First Responder Network Contract )
3. For quite some time now, Verizon has been gearing up to acquire major companies in the digital media space. The company is systematically diversifying its business model into the digital media platform, targeting the lucrative segments of digital media, advertising and content creation as well as distribution. Further, we believe that the combination of Yahoo and AOL should help Verizon sell more digital advertisements and create a major player in the mobile media and advertising space. (Read more: Will Verizon Bind AOL & Yahoo Assets by an 'Oath'? )
4. AT&T's Public Sector sales were nearly $15 billion in 2016. The organization provides advanced information and communications technology services to government and education customers across federal, state, local and international public sector markets. Public sector agencies are increasingly migrating from legacy TDM to IP-based cloud and Ethernet services. (Read more: AT&T Forms a New Global Public Sector Organization )
5. Comcast claims that its prepaid internet service will be both cost-effective and customer-friendly. The company's prepaid service could also be a good alternative to hotspot products, in some cases. Xfinity Internet offering comes in the form of an annual contract-free or credit free service and is also available online. Notably, contract-free and credit-check-free or deposit-free prepaid schemes have become a new trend in the pay-TV industry. (Read more: Will Comcast Xfinity Service be Appealing as a Prepaid Plan? )
Price Performance
The following table shows the price movement of major telecom players over the past week and last six months.
In the last five trading sessions, share price movement of most of the major telecom stocks witnessed a mixed trend. None of these stocks reflected any significant uptrend or downtrend in the aforesaid time frame.
However, in the last six months, the price performances of the major telecom stocks were positive barring Verizon. Among the stocks that gained substantially are T-Mobile US (39.56%), Sprint (28.79%), Charter Communications (23.80%), America Movil (23.57%), Comcast (14.17%), DISH Network (13.10%) and Telefonica (11.94%).
What's Next in the Telecom Space?
In the next week, Canadian telecom behemoth Shaw Communications will release second quarter of fiscal 2017 financial results. Except this,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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Yahoo! Inc. (YHOO): Free Stock Analysis Report
Motorola Solutions, Inc. (MSI): Free Stock Analysis Report
AT&T Inc. (T): Free Stock Analysis Report
Sprint Corporation (S): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
Comcast Corporation (CMCSA): Free Stock Analysis Report
Charter Communications, Inc. (CHTR): Free Stock Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
