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Telecom Stock Roundup: Strong Q1 for TDS, CenturyLink and Windstream Disappoint

The telecom space was predominantly buzzing with earnings news last week. Telephone and Data Systems Inc. TDS and Cable ONE Inc. CABO reported impressive results in the first quarter of 2017. Both the company’s earnings and revenues estimates outpaced the Zacks Consensus Estimate.

Telephone and Data Systemsexited the first quarter of 2017 with 581,900 residential wireline connections, 325,500 commercial wireline connections and 294,300 cable connections. While, Cable ONE exited the reported quarter with 608,515 residential customers and 52,453 business customers.

On the other hand, CenturyLink Inc. CTL and Windstream Holdings Inc. WIN reported disappointing results in the first quarter of 2017. Both the companies’ earnings and revenues estimates lagged the Zacks Consensus Estimate.

As of Mar 31, 2017, CenturyLink’s total access lines were 10.945 million, down 5.7% year over year. High-speed broadband customer count was 5.945 million, down 1.83%. Meanwhile, Windstream had 1.3375 million household customers. High-speed Internet customer base was 1.0476 million while the digital TV customer base was 0.3106 million. ILEC small business customers totaled 0.133 million. Enterprise customers were 0.0353 million. CLEC consumer customers were 0.6474 million, and CLEC small business customers were 0.0955 million.

Regional wireless operator United States Cellular Corp. USM and regional wireline operator Cincinnati Bell Inc. CBB reported mixed financial results in the first quarter of 2017. Both the companies’ top-line missed the Zacks Consensus Estimate while bottom- line surpassed the mark. United States Cellular currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United States Cellular exited the first quarter of 2017 with a subscriber base of 4,996,000. Postpaid subscriber base totaled 4,455,000 and prepaid subscriber base totaled 480,000. Likewise, at the end of the first quarter of 2017, Cincinnati Bell had 0.1966 million residential voice lines and 0.3203 million business voice lines. Long distance lines were 0.311 million. DSL Internet subscribers were 0.1001 million. Fioptics Internet customers were 0.2073 million. Fioptics video subscribers were 0.1411 million.

Outside the U.S., Liberty Global Plc. LBTYA, a leading European quad-play cable MSO (multi service operator), reported disappointing financial results in the first quarter of 2017. Quarterly net loss of 33 cents per share was in contrast to the Zacks Consensus Estimate of a net income of 28 cents per share. Total revenue of $3,519 million was down 19.3 % year over year.

In the reported quarter, Liberty Global added a total of 244,300 RGUs, (revenue generating units) including net gains of 154,400 and 105,000 subscribers for broadband Internet and telephony services, respectively. However, the company lost 15,100 video customers. Nonetheless, it added 18,200 mobile customers including a net gain of 91,200 postpaid subscribers and a net loss of 73,000 prepaid subscribers.

Read the last Telecom Stock Roundup for May 04, 2017.

Recap of the Week’s Most Important Stories

1.    GAAP net income of Telephone and Data Systems in the reported quarter was $37 million or 33 cents per share compared with a net income of $8 million or 7 cents per share in the year-ago quarter. Quarterly earnings per share of 33 cents were significantly above the Zacks Consensus Estimate of 1 cent. Revenues were up 1% year over year to $1,238 million in the reported quarter, slightly above the Zacks Consensus Estimate of $1,236.7 million.  (Read more: Telephone & Data Systems Tops Q1 Earnings and Revenues)

2.    CenturyLink's net income in first-quarter 2017 was $163 million or 30 cents per share compared with $236 million or 44 cents per share in first-quarter 2016. Adjusted earnings per share of 52 cents missed the Zacks Consensus Estimate by 1 cent. Moreover, the bottom line declined 26.76% on a year-over-year basis. Quarterly total revenue of $4,209 million was down 4.36% from the prior-year quarter and below the Zacks Consensus Estimate of $4,268.9 million.  (Read more:  CenturyLink Lags Q1 Earnings and Revenue Estimates)

3.    Windstream’s quarterly loss per share of 89 cents was much wider than the Zacks Consensus Estimate of a loss of 34 cents. On a GAAP basis, the company reported net loss of $111.3 million or a loss of 89 cents per share compared with a net loss of $231.9 million or $2.52 per share in the year-ago quarter. Total revenue declined 1% year over year to $1,365.7 million in the first quarter, missing the Zacks Consensus Estimate of $1,537.6 million.   (Read more:  Windstream Reports Wider-than-Expected Loss in Q1)

4.    On a GAAP basis, quarterly net income of Cincinnati Bell came in at $57.8 million or $1.37 per share compared with a net income of $4.4 million or 10 cents per share in the year-ago quarter. However, quarterly adjusted loss per share of 1 cent outpaced the Zacks Consensus Estimate of 4 cents. Quarterly total revenue was $278.2 million, down 4% year over year and lagging the Zacks Consensus Estimate of $295 million.  (Read more: Cincinnati Bell Reports Narrower-than-Expected Q1 Loss)

5.    GAAP net income of United States Cellular came in at $26 million or 31 cents per share compared with a net income of $9 million or 10 cents per share in the year-ago quarter. Quarterly adjusted earnings per share of 18 cents were well above the Zacks Consensus Estimate of 11 cents per share. Quarterly total revenue of $936 million was down 3% year over year missing the Zacks Consensus Estimate of $958.9 million.  (Read more: United States Cellular Q1 Earnings Top, Revenues Lag)

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

0.32%

-0.66%

T

0.68%

5.31%

S

1.02%

11.14%

TMUS

2.03%

25.62%

CHTR

0.92%

19.51%

TEF

-2.71%

26.27%

AMX

3.82%

38.67%

CMCSA

2.66%

17.66%

DISH

2.80%

11.02%

In the last five trading sessions, share price movement of most of major telecom stocks was positive barring Telefonica. America Movil (3.82%) gained substantially in the same time period. Similarly, in the last six months, the price performances of the major telecom stocks were positive barring Verizon. Among the stocks that gained substantially are America Movil (38.67%), Telefonica (26.27%), T-Mobile US (25.62%), Charter Communications (19.51%), Comcast (17.66%), Sprint (11.14%) and DISH Network (11.02%).

What’s Next in the Telecom Space?

In the next week, Canadian telecom giant TELUS and Spanish telecom behemoth Telefonica will release the first quarter of 2017 financial results. Except these two events, 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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Cincinnati Bell Inc (CBB): Free Stock Analysis Report
 
Telephone and Data Systems, Inc. (TDS): Free Stock Analysis Report
 
Liberty Global PLC (LBTYA): Free Stock Analysis Report
 
Cable One, Inc. (CABO): Free Stock Analysis Report
 
CenturyLink, Inc. (CTL): Free Stock Analysis Report
 
Windstream Holdings, Inc. (WIN): Free Stock Analysis Report
 
United States Cellular Corporation (USM): Free Stock Analysis Report
 
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