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Telecom Stock Roundup: Qualcomm - Apple Patent Dispute Intensifies, T-Mobile US Hikes Unlimited Data Price

The telecom industry experienced a solid run on the bourses in the past one week as most of the key stocks traded in the green. Several important developments also took place in the meantime.

Qualcomm Inc. QCOM, the largest mobile chipset manufacturer, recently filed a complaint with the U.S. International Trade Commission (ITC) against tech giant Apple Inc. AAPL for infringing six of its patents covering various aspects of mobile phone technology. Qualcomm has requested ITC to investigate Apple's infringing imports and issue a Limited Exclusion Order (LEO). The order will ban importation of iPhones and other products linked with the patent in the U.S.

T-Mobile US Inc. TMUS, the third-largest national wireless operator in the U.S., recently raised the price of its best unlimited data plan -- One Plus. Management hiked the price from $5 to $10 a month in addition to the monthly fee it charges for its basic T-Mobile One plan. A single line of T-Mobile One Plus now costs $80 a month, while four lines will cost a total of $200.The company called it the end of promo program.

Regional wireline operator Cincinnati Bell Inc. CBB recently announced that it will buy Hawaiian Telcom Inc. for $650 million and OnX Enterprise Solutions for $201 million. The company took the step to expand network and enterprise IT services. The combined entity will have 14,000 route miles of fiber and access to an undersea cable connecting Asia. Cincinnati Bell currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

According to recent news by The Wall Street Journal, leading satellite TV operator DISH Network Corp. DISH is considering a joint venture (JV) with online retailing giant Amazon.com Inc. AMZN. With the JV, the company aims to install an Internet-of-Thing (IoT) centric wireless network. However, the news magazine has cautioned that no agreement is imminent. Further, neither of the complies has confirmed the news.

Meanwhile, U.S. telecom behemoth, AT&T Inc. T, completed the acquisition of the Vyatta network operating system and associated assets of Brocade Communications Systems Inc. (BRCD). Brocade’s Vyatta platform includes the vRouter product line. As part of the deal, AT&T hired some of Brocade’s employees associated with Vyatta business.

Outside the U.S., America Movil SAB AMX, the undisputed leader of the Mexican telecom market, recently purchased 60 MHz of wireless spectrum (airwave) in the 2.5 GHz band from Grupo MVS. Mexican telecom regulator, Federal Telecommunications Institute (IFT), approved this deal in May 2017. However, the financial terms are yet to be disclosed. The acquisition of spectrum will enhance the company’s high-speed data service.

Read the last Telecom Stock Roundup for Jul 06, 2017.

Recap of the Week’s Most Important Stories

1.    Qualcomm expects the ITC investigation to start this August. The company claims that each of its six patents is vital to iPhone functions. These patents provide technology to smartphones providing high performance with extended battery life.  While these technologies are central to iPhone’s performance, Apple continues to use Qualcomm's technology without payments. (Read more:  Qualcomm Alleges Apple of Patent Violation, Fuels Legal War)

2.    The wireless service business model of T-Mobile US hinges on its “Un-Carrier” value proposition and its strategic marketing efforts. The U.S. wireless market is highly competitive with the presence of mobile behemoths such as Verizon, AT&T and Sprint. The recent price rise will make the company’s unlimited data plan less attractive compared with Verizon. At this juncture, a less attractive plan may dent the company’s top line and hurt the overall financial results. (Read more:  T-Mobile US Raises Unlimited Data Plan Price - What's Next?)

3.    In the last one decade, DISH Network has developed an extremely strong portfolio of lucrative wireless spectrums which are still unutilized. The company spent nearly $21 billion to build this spectrum portfolio, which, according to some estimates, is currently valued at no less than $45 billion. In Mar 2017, the company announced plans to build a narrowband IoT (NB-IoT) network to meet the FCC’s (Federal Communications Commission) buildout requirements. (Read more:  Is DISH Network Eyeing Wireless Joint Venture with Amazon?)

4.    The Vyatta deal will expand AT&T’s SD-WAN and white box capabilities for business customers. The buyout will enable the company to deliver cloud or premises-based VNFs (virtualized network functions) in connection with AT&T Software-defined Wide Area Network (SD-WAN) cloud service with VeloCloud. The Vyatta platform will help AT&T in its network transformation drive, allowing addition of new features in less time and cost. (Read more:  AT&T Completes Vyatta Buyout, Boosts SD-WAN Portfolio)

5.    Over the last couple of years, America Movil has been systematically enriching its spectrum portfolio.  In Jun 2016, the IFT granted concessions for the 1710-1780 MHz/2110-2180 MHz AWS frequency bands to America Movil and AT&T. On Feb 15, 2016, the IFT opened an auction for 80 MHz of wireless spectrum across various Advanced Wireless Services (AWS) bands. America Movil and AT&T emerged as the two winners of the spectrum auction. (Read more:   America Movil Acquires Wireless Airwave from Grupo MVS)

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

-1.65%

-17.75%

T

-1.89%

-10.08%

S

0.12%

-4.41%

TMUS

3.12%

7.55%

CHTR

1.37%

14.82%

TEF

1.95%

7.60%

AMX

4.23%

32.38%

CMCSA

1.48%

7.24%

DISH

3.93%

4.69%

 

In the last five trading sessions, share price movement of most of major telecom stocks was positive. America Movil (4.23%), DISH Network (3.93%) and T-Mobile US (3.12%) gained significantly in this time frame.

Similarly, 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 (32.38%) and Charter Communications (14.82%). In contrast, Verizon (17.75%) and AT&T (10.08%) lost significantly.

What’s Next in the Telecom Space?

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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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Cincinnati Bell Inc (CBB): Free Stock Analysis Report
 
DISH Network Corporation (DISH): Free Stock Analysis Report
 
Apple Inc. (AAPL): 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
 
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