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Telecom Stock Roundup: T-Mobile US, Crown Castle and Qualcomm Post Strong Financial Results

The telecom industry witnessed a pretty unremarkable week with earnings being the sole highlight. National wireless carrier T-Mobile U.S Inc. TMUS, largest mobile chipset developer Qualcomm Inc. QCOM and leading wireless tower operator Crown Castle International Corp. CCI reported excellent financial results wherein both the top line and bottom line surpassed the Zacks Consensus Estimate.

In the reported quarter, T-Mobile US added net 0.786 branded postpaid phone customers, 0.031 branded postpaid mobile broadband customers, 0.094 branded prepaid customers and 0.422 wholesale customers. Total net customer addition was 1.333 million, exhibiting the 17th successive quarter of over 1 million net customer additions.

During the fiscal third quarter, Qualcomm shipped approximately 187 million CDMA-based MSM (Mobile Station Modem) chipsets, reflecting a decline of 7% year over year. This was also below the midpoint of third-quarter chipset outlook of 190 million, as issued by management earlier.The company is expected to ship 205–225 million MSM chipsets in the ongoing fourth quarter of fiscal 2017.

Crown Castle has generated 90% of revenues from four major wireless operators in the U.S. Moreover, the company has decided to acquire privately held Lightower Fiber Networks for $7.1 billion, including debt.Acquisition of Lightower will increase Crown Castle’s fiber network and tower count by nearly 80% and 20%, respectively. Crown Castle currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In Mexico, America Movil S.A.B. AMX, reported mixed financial results in the second quarter of 2017. While revenues grew year-over-year, the bottom line fell below the Zacks Consensus Estimate.In the reported quarter, America Movil added a net 215,000 postpaid customers. It gained 565,000 postpaid subscribers but lost 350,000 prepaid customers. The company gained 209,000 broadband connections but lost 278,000 pay-TV ones.

Apart from earnings news, AT&T Inc. T is reportedly rebranding its AT&T GoPhone wireless prepaid service to AT&T Prepaid. Customers who activate a new line will receive their 3rd and 12th months of service free. Since prepaid service needs no contract, the free months are offered only to those who maintain continuous service for 12 months. The service will apply to the company’s unlimited bundles offered at $40 and $60 per month.

Verizon Communications Inc. VZ recently faced data violation, wherein records of 14 million customers were exposed. An employee of NICE Systems left the data on an unsecured Amazon S3 storage server, making it vulnerable to threats from any external party.Management cites a misconfigured security setting on the server as the cause of violation.

The company wants access to a significant chunk of wireless consumer data that can be used for ad targeting. To this end, it is exploring the possibility of a data partnership with its peers, such as T-Mobile US, Sprint Corp. S, Telefonica SA TEF and Vodafone Group plc. VOD.

Read the last Telecom Stock Roundup for Jul 13, 2017.

Recap of the Week’s Most Important Stories

1.    GAAP net income of T-Mobile US in the reported quarter was $582 million or 67 cents per share compared with a net income of $228 million or 25 cents in the year-ago quarter. Quarterly earnings per share of 67 cents were well above the Zacks Consensus Estimate of 36 cents. Total revenue jumped 10% year over year to $10,213 million in the reported quarter surpassing the Zacks Consensus Estimate of $9,852 million.  (Read more:  T-Mobile US Q2 Earnings & Revenues Beat Estimates)

2.    Crown Castle reported quarterly earnings per share of $1.20, beating the Zacks Consensus Estimate of $1.15. Likewise, GAAP net income rose a whopping 49.4% year over year to $112.1 million. Total revenue in the second quarter increased 7.9% year over year to $1,038.3 million, beating the Zacks Consensus Estimate of $1,036 million. (Read more: Crown Castle Q2 Earnings & Revenues Beat Estimates)

3.    On a GAAP basis, quarterly net income of Qualcomm came in at $866 million or 58 cents per share compared with $1,444 million or 97 cents in the year-ago quarter. Adjusted earnings per share (excluding special items) were 70 cents, ahead of the Zacks Consensus Estimate of 67 cents. Quarterly total revenue of $5,371 million was down 11.1% year over year while surpassing the Zacks Consensus Estimate of $5,221 million. (Read more:  Qualcomm Tops Q3 Earnings and Revenues Estimates)

4.    America Movil’s quarterly net income was $771 million, up a whopping 81.8% year over year. However, quarterly earnings per ADR (American Depositary Receipt) of 23 cents were well below the Zacks Consensus Estimate of 32 cents. Total revenue of approximately $13,432 million highlighted an improvement of 4% on a year-over-year basis. (Read more: America Movil Q2 Earnings Miss, Revenues Rise Y/Y)

5.    Stiff pricing competition in the industry is a genuine concern. Recently, we witnessed the four major wireless telecommunications companies participating in the unlimited postpaid data plan war in order to stand out. These wireless operators are now extending their unlimited data plan to the prepaid market as well. AT&T’s decision rebranding the prepaid service is one such avenue. (Read more:  AT&T to Rebrand Mobile Prepaid Service With Attractive Offer)

Price Performance

The following table shows the price movement of major telecom players over the past week and last six months.

Company

Last Week

Last 6 Months

VZ

0.91%

-17.58%

T

-0.49%

-12.83%

S

1.84%

-5.82%

TMUS

4.49%

3.94%

CHTR

1.57%

12.38%

TEF

1.09%

11.07%

AMX

3.78%

37.77%

CMCSA

0.73%

6.95%

DISH

0.18%

8.23%

In the last five trading sessions, share price movement of most of major telecom stocks was positive barring AT&T. T-Mobile US (4.49%) and America Movil (3.78%) gained significantly in this time frame. Likewise, in the last six months, the price performances of most of the major telecom stocks were positive. Among the stocks that gained substantially are America Movil (37.77%), Charter Communications (12.38%) and Telefonica (11.07%). In contrast, Verizon (17.58%) and AT&T (12.83%) lost significantly.

What’s Next in the Telecom Space?

We expect a busy week to continue for the telecom sector as several large sector participants like Verizon, AT&T, Comcast, Charter Communications, American Tower, Telefonica and Chunghwa Telecom will release their quarterly financial results. The market will closely evaluate these results in order to assess industry dynamics and future growth prospects.

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Crown Castle International Corporation (CCI): Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Telefonica SA (TEF): Free Stock Analysis Report
 
Sprint Corporation (S): Free Stock Analysis Report
 
Verizon Communications Inc. (VZ): Free Stock Analysis Report
 
T-Mobile US, Inc. (TMUS): Free Stock Analysis Report
 
America Movil, S.A.B. de C.V. (AMX): Free Stock Analysis Report
 
Vodafone Group PLC (VOD): Free Stock Analysis Report
 
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