Telecom Stock Roundup: Sprint's Omni Launch, Verizon 5G Trial Run & More

In the past five trading days, telecom stocks steadily went uphill as the “Phase One” trade deal between the United States and China reportedly inched closer to conclusion. The partial trade accord is widely anticipated to ease the bilateral tensions created by the prolonged trade war, and optimism about a probable signing of an agreement between President Trump and his Chinese counterpart seemed to propel the industry. However, U.S. legislations backing Hong Kong protesters seemed to be a latent threat, although both the countries appeared intent to not let such stray incidents derail the trade talks.  

To fast-track the negotiation process, China extended an olive branch by unveiling new guidelines to protect IP rights. Although the announcement lacked clarity, it proposed plans to study the necessity and feasibility of drawing up a basic law for safeguarding IP rights. The government also revealed that it would significantly increase the penalties for IP infringement and use stringent technological barriers to thwart such attempts. Acknowledging the positive steps, President Trump observed that the trade accord was nearing conclusion, further buoying the industry’s growth.

Meanwhile, the Federal Communications Commission (“FCC”) has formalized a key proposal issued last year. With a unanimous 5-0 verdict, the telecom regulatory authority has prohibited the use of federal subsidies by small and rural carriers to buy equipment from Chinese telecom goods manufacturer Huawei and ZTE on national security grounds. Huawei has vehemently opposed the unilateral steps by the U.S. authorities. The Trump administration has also signed two bills in an act of solidarity with Hong Kong protesters. While one authorizes the U.S. government to impose sanctions for human rights abuses, the other bans the sale of American-made tear gas, rubber bullets or other crowd-control equipment to the Hong Kong authorities. Although both the incidents have initiated strong response from the communist nation, they are not likely to affect the trade discussions as both countries remain committed to an early resolution of the trade disputes on domestic compulsions.

In another notable incident, the FCC has proposed to utilize the less-used block of spectrum that is reserved for auto safety by splitting it for use by wireless devices to meet the exponential growth of bandwidth due to increased 5G deployment. The telecom regulatory authority intends to offer only one half of the existing spectrum to the auto industry for testing and development of auto safety communications system, while freeing up the other for wireless carriers. The plan has been strongly protested by the U.S. Transportation Department, which maintains that the entire band is necessary for the future of auto safety technology’s development and expansion.

Regarding company-specific news, product launch, strategic collaboration and 5G deployment took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.     Sprint Corporation S has unveiled a cloud-based commercial phone service dubbed Omni to primarily cater to medium and small-sized businesses (“SMBs”).

Loaded with all the functionalities of a landline phone, Omni brings mobility to SMBs, offering an affordable access to modern, feature-rich, cloud-based phone services that are otherwise available to big-businesses and corporations. Omni leverages the VoIP technology of Ooma — one of the premier VoIP service providers of the country. This is likely to enable Sprint to either bundle Omni with other compatible products and services or offer it as a standalone service. (Read more: Sprint Offers Cloud-Based Commercial Phone Service Omni)
 
2.     Verizon Communications Inc. VZ has collaborated with leading tech behemoths — Qualcomm Incorporated and Ericsson — to demonstrate the feasibility of next-gen networking technology Dynamic Spectrum Sharing (DSS).

The DSS strategy revolutionizes the introduction of new 5G technologies that allows the deployment of both 4G and 5G in the same band and proactively allocates spectrum resources between them, based on user demand. The combination of faster commercialization and low investment requirements has made spectrum sharing an essential part of the operator’s 5G strategies. (Read more: Verizon Initiates Trial Run for Advanced 5G Solutions)

3.      AT&T Inc.’s T largest operating segment, AT&T Communications, recently announced that it is working to bring 5G service to millions of consumers and businesses this year. The telecom bellwether remains on track to provide nationwide 5G to customers in the first half of 2020.

In the coming weeks, AT&T’s 5G network will be launched over low-band spectrum in areas of Indianapolis, IN; Pittsburgh, PA; Providence, RI; Rochester, NY; and San Diego, CA. The company also intends to launch this breakthrough service in several markets, which include Boston, Las Vegas, Milwaukee, New York City, San Jose, San Francisco, Birmingham, Bridgeport, and Louisville. (Read more: AT&T on Track to Offer Nationwide 5G Service in 2020)

4.     Ericsson ERIC recently made public the November 2019 edition of its Mobility Report. The Swedish telecom equipment maker forecasts global 5G subscriptions to surpass 2.6 billion within the next six years on the back of continued momentum and a rapidly evolving ecosystem.

The report reveals that 5G will cover up to 65% of the world’s population by the end of 2025 and handle 45% of global mobile data traffic. Average monthly data-traffic-per-smartphone is anticipated to rise from the current figure of 7.2 GB to 24 GB by the end of 2025, partly driven by new consumer behavior like virtual reality streaming. Ericsson currently has more than 75 commercial 5G agreements with communication service providers, of which 23 are live networks. (Read more: Ericsson Issues Latest Mobility Report, 5G Momentum Stays)

5.     CenturyLink, Inc. CTL has unveiled the revamped version of its Edge Computing platform — Content Delivery Network (CDN) — to create a more reliable, dynamic and customized web experience for application developers.

The company’s CDN service provides state-of-the-art technology to ensure fast and reliable web content, using the largest distributed platform in the world. It provides continuous monitoring of Internet inconsistencies and reduces latency and data backhaul, ensuring timely and consistent content delivery, performance and quality of service. (Read more: CenturyLink Updates Edge Computing Platform for App Developers)

Price Performance

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

In the past five trading days, T-Mobile has been the biggest gainer with its share price increasing 1.7%, while CenturyLink has been the biggest decliner with its stock down 2.2%.

Over the past six months, CenturyLink has been the best performer with its stock appreciating 26.5%, while Arista Networks has been the sole decliner with its stock down 26.8%.

Over the past six months, the Zacks Telecommunications Services industry has recorded average growth of 4.9% and the S&P 500 has rallied 12.7%.

What’s Next in the Telecom Space?

In addition to product launches, strategic deals and 5G deployments, all eyes will remain glued to how the government handles the various issues relating to the “Phase One” deal.

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