Telecom Stock Roundup: Juniper Boosts UK Network, Viasat's Brazil Expansion & More

In the past five trading days, telecom stocks witnessed a roller-coaster ride as both the United States and China blew hot and cold for a mutually agreeable solution to the 15-month old trade war. With China celebrating the 70th anniversary of communist rule with the Golden Week holiday from Oct 1-7, officials are busy preparing for the trade talks scheduled in the second week of the month. Although both sides have agreed to ease the bilateral tensions and pave the way for an early settlement of trade disputes, latent threats of the deal falling flat clouded the industry.  

In his usual tirade, President Trump hinted that trade negotiations with the communist nation are likely to be reached sooner than expected. At the same time, he maintained that the deal would only be accepted if it is deemed fair to the United States and kept the options open to roll back tariffs. On the other hand, China reiterated its demand for “a solution to the problem through equal dialogue in accordance with the principle of mutual respect, equality, and mutual benefit.” With both the countries seeking a profitable solution to the crisis on domestic compulsions, they can hardly afford any slip-ups and the stakes are too high to reach an early resolution.

Meanwhile, the U.S. Court of Appeals for the District of Columbia Circuit has ruled that states could come up with their own net neutrality rules to protect consumers in the absence of federal approach. Although the court upheld the decision by the FCC to repeal net neutrality rules imposed in 2017, it maintained that the government entity does not have the legal authority to prevent federal states from framing their own law. The verdict represented a win-win solution for both the supporters and antagonists of net neutrality rules, and is likely to encourage several federal states to adopt their own set of Internet regulations.

Regarding company-specific news, network upgrade, footprint expansion, ongoing probe and R&D focus primarily took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.      Juniper Networks, Inc. JNPR has augmented the network capabilities of Telefonica UK, a leading telecommunications service provider in the United Kingdom, for the likely rollout of 5G services across the country.

The improvement in infrastructure facilities is expected to reduce the complexity of the network, while increasing operational flexibility and efficiency of Telefonica UK, which is owned by Madrid-based Telefonica, S.A. Notably, Juniper has collaborated with Telefonica to build the Fusion Network across the globe that would help deliver superior customer service through infrastructure upgrade and simplified operations. The company has presently implemented the first phase of this project in the United Kingdom with the successful migration of Telefonica UK’s services to the Fusion Network in the country. (Read more: Juniper Boosts Network Capabilities of Telefonica UK)
 
2.     Viasat Inc. VSAT has extended its Latin American footprint by opening a new office in Brasilia, Brazil, and relocating an existing office to a larger facility within Sao Paulo.

The newly opened office in Brasilia will be in close proximity to Telebras – the state-controlled public telecommunications firm and strategic partner of Viasat – which is likely to translate into seamless cooperation between the two entities. On the other hand, the bigger office space in the relocated location within the largest city of the country would facilitate the company to make its presence felt in the growing commercial and financial center. The twin offices are likely to supplement its regional expansion plans as it focuses on bringing new satellite-enabled services across the country. (Read more: Viasat Extends Latin American Footprint With Brazil Offices)

3.      Ericsson ERIC recently revealed that its third-quarter 2019 results will be impacted by a 12 billion Swedish krona provision. This is due to a possibility of unfavorable outcome of the ongoing investigations by U.S. authorities into its business ethics breaches in six countries.

The investigation covers a period ending first-quarter 2017 and revealed breaches of Ericsson’s Code of Business Ethics and the FCPA in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam. (Read more: Ericsson Makes Provision for SEK 12B to Resolve U.S. Probes)

4.     Nokia Corporation NOK was chosen by KDDI Corporation, a leading Japanese telecommunications operator, as a primary partner to upgrade its 4G network to 5G.

With Nokia’s cutting-edge radio access solution, KDDI will launch 5G services in 2020 as it intends to meet the increasing consumer and industrial demands for the future of connectivity. The 5G network will support KDDI across cmWave and mmWave frequency bands and can be deployed in distributed and centralized architectures. (Read more: Nokia Secures Deal to Upgrade KDDI's Network to 5G)

5.     BlackBerry Limited BB recently created Advanced Technology Development Labs (BlackBerry Labs). This is going to be a new business unit operating at the forefront of R&D in the cybersecurity landscape.

BlackBerry Labs’ initial projects will focus on machine learning approaches to security in partnership with the company’s existing Cylance, Enterprise and QNX business units. BlackBerry Labs will operate as the company’s own business unit, solely focused on innovating and developing the technologies of tomorrow that will be necessary for success. (Read more: BlackBerry Establishes Advanced Technology Development Labs)

Price Performance

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

In the past five trading days, none of the stocks gained while CenturyLink was the biggest decliner with its stock down 12.1%.

Over the past six months, Qualcomm has been the best performer with its stock appreciating 21.8%, while Arista Networks was the biggest decliner with its stock down 37.1%.

Over the past six months, the Zacks Telecommunications Services industry has recorded average decline of 0.8% while the S&P 500 lost 0.1%.

What’s Next in the Telecom Space?

In addition to strategic deals, product launches and 5G deployments, all eyes will remain glued to how the government handles the various issues related to trade war negotiations.

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Ericsson (ERIC) : Free Stock Analysis Report
 
Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
 
Viasat Inc. (VSAT) : Free Stock Analysis Report
 
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BlackBerry Limited (BB) : Free Stock Analysis Report
 
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