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Telecom Stock Roundup: Q3 Earnings Galore — TMUS Beat, AT&T Miss, S Mixed Bag

The U.S. telecom industry busied itself solely with third-quarter 2017 earnings releases.

 On the earnings front, national wireless carrier T-Mobile US Inc. TMUS reported strong financial numbers in the third quarter of 2017. While the company’s net income outpaced the Zacks Consensus Estimate, revenues were almost in line. The company also raised its financial outlook for 2017. T-Mobile US gained added net 0.595 million branded postpaid phone customers, 0.222 million branded postpaid other customers, 0.226 million branded prepaid customers and 0.286 million wholesale customers.

On the other hand, U.S. telecom behemoth AT&T Inc. T reported disappointing third-quarter 2017 financial results. Both the top and the bottom line of the company missed the Zacks Consensus Estimate. Importantly, in the domestic market, net additions of its postpaid wireless subscribers declined a massive 44.8% year over year.AT&T lost 251,000 satellite TV customers and 134,000 U-verse TV customers. However, it gained 296,000 DIRECTV NOW connections.

Meanwhile, Sprint Corp. S, the fourth largest national telecom carrier, reported mixed financial results in the second quarter of fiscal 2017, wherein the top line lagged the Zacks Consensus Estimate but the bottom line came in better-than the estimate.

Comcast Corp. CMCSA, the largest cable MSO (multi service operator), reported mixed financial results in the third quarter of 2017. While the top line failed to meet the Zacks Consensus Estimate, the bottom line surpassed the same.The company added a net of 214,000 high-speed Internet customers and 51,000 security and automation customers. However, it lost 94,000 voice customers and 125,000 video customers in the reported quarter.

Charter Communications Inc. CHTR, a leading cable MSO, reported disappointing financial results in third-quarter 2017, wherein both the top and the bottom line lagged the Zacks Consensus Estimate.Charter Communications’ residential high-speed Internet subscribers increased 249,000 to 22.282 million. Voice subscribers grew 27,000 to 10.405 million. However, video subscribers decreased 104,000 to 16.542 million.

Outside the United States, Brazilian telecom carrier Telefonica Brasil SA VIV reported mixed financial results in the third quarter of 2017. While the bottom line surpassed the Zacks Consensus Estimate, the top line grew year over year. The company’s postpaid mobile subscriber count increased 9.7% year over year to 35.664 million. However, its prepaid mobile customer count declined 5.1% year over year to 38.897 million.

Leading telecom equipment manufacturer Nokia Corp. NOK reported strong results in the third quarter of 2017, wherein both the top and bottom line outpaced the Zacks Consensus Estimate.

Read the last Telecom Stock Roundup for Oct 20, 2017.

Recap of the Week’s Most Important Stories

1.    GAAP net income of T-Mobile US in the reported quarter was $537 million or 63 cents per share compared with net income of $353 million or 42 cents in the year-ago quarter. Quarterly earnings per share of 63 cents came in well above the Zacks Consensus Estimate of 44 cents.Total revenues increased 7.7% year over year to $10,019 million in the reported quarter slightly below the Zacks Consensus Estimate of $10,022 million.  (Read more:  T-Mobile US Q3 Earnings Beat Estimates, Lifts Outlook)

2.    On a GAAP basis, AT&T reported net income of $3,029 million or 49 cents per share compared with $3,328 million or 54 cents in the year-ago quarter. Quarterly adjusted (excluding non-recurring items) earnings per share came in at 74 cents, a penny shy of the Zacks Consensus Estimate.Quarterly total revenues declined 3% year over year to $39,668 million. Further, revenues also missed the Zacks Consensus Estimate of $40,266 million. (Read more:  AT&T Q3 Earnings, Revenues Lag Estimates on Cord-Cutting)

3.    Sprint's second-quarter 2017 net loss was $48 million or 1 cent per share compared with net loss of $142 million or 4 cents in the year-ago quarter. Moreover, second-quarter net loss was 1 cent as against the Zacks Consensus Estimate of a loss of 2 cents. Quarterly total revenues totaled $7,927 million, down 3.9% year over year and were below the Zacks Consensus Estimate of $8,071 million. (Read more:  Sprint Betters Estimates in Q2 Earnings, Revenues Miss)

4.    GAAP net income of Comcast came in at $2,650 million or 55 cents per share compared with $2,237 million or 46 cents in the prior-year quarter. Quarterly adjusted earnings per share of 52 cents outpaced the Zacks Consensus Estimate of 49 cents. Total revenues were $20,983 million, reflecting a decline of 1.6% year over year lagging the Zacks Consensus Estimate of $21,123 million. (Read more:  Comcast Q3 Earnings Beat Estimates, Revenues Lag)

5.    GAAP net income of Charter Communications in the reported quarter was $48 million compared with net income of $189 million in the year-ago quarter. Quarterly earnings of 19 cents per share came in well below the Zacks Consensus Estimate of $1.04.Third-quarter 2017 total revenues of $10,458 million increased 4.2% year over year but missed the Zacks Consensus Estimate of approximately $10,485 million. (Read more: Charter Communications Q3 Earnings Miss Estimates)

Price Performance

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

Company

Last Week

Last 6 Months

VZ

2.15%

3.23%

T

-5.69%

-16.72%

S

-0.99%

-21.44%

TMUS

0.55%

-8.66%

CHTR

-11.50%

-8.43%

TEF

-5.82%

-9.59%

AMX

-3.92%

13.38%

CMCSA

0.72%

-6.50%

DISH

-0.95%

-24.30%

In the last five trading sessions, share price movement of most of the major telecom stocks was negative. Charter Communications (11.50%),TEF (5.82%),AT&T (5.69%) and America Movil (3.92%) lost significantly during this period. Likewise, price performances of most of the major telecom stocks witnessed a negative trend in the last six months. While America Movil (13.38%) gained remarkably, DISH Network (24.30%), Sprint (21.44%) and AT&T (16.72%) lost substantially in the same time frame.  

What’s Next in the Telecom Space?

We expect heightening activity in the telecom sector over the next week as big names like Qualcomm, Cincinnati Bell, BCE Inc., Liberty Global, CenturyLink and Level 3 Communications will release their third-quarter 2017 financial results. The market will keep a close watch their quarterly results to assess industry dynamics and growth prospects.

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Nokia Corporation (NOK): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Sprint Corporation (S): Free Stock Analysis Report
 
Comcast Corporation (CMCSA): Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR): Free Stock Analysis Report
 
T-Mobile US, Inc. (TMUS): Free Stock Analysis Report
 
Telefonica Brasil S.A. (VIV): Free Stock Analysis Report
 
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