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Telecom Stock Roundup: Solid Q3 for American Tower, SBA Communications, Cincinnati Bell, Qualcomm

Last week saw a number of telecom companies posting strong quarterly results. However, this could not cheer investors, as stocks of most telecom majors lost value.

Wireless Tower operators American Tower Corp. AMT and SBA Communications Corp. SBAC, regional telecom operator Cincinnati Bell Inc. CBB and mobile chipset behemoth Qualcomm Inc. QCOM, reported strong financial results wherein both the top line and the bottom line outpaced the Zacks Consensus Estimate.

Outside the U.S., Canadian telecom giant Shaw Communications Inc. SJR reported mixed results in the third quarter of 2017. While the top line missed the Zacks Consensus Estimate, the bottom line surpassed the same. On the other hand, Spanish telecom behemoth Telefonica SA TEF reported strong financial results in the third quarter of 2017, wherein both the top line and the bottom line grew year over year.

American Tower exited third-quarter 2017 with a total of 147,873 towers of which 39,764 are domestic and 108,109 are international towers. Similarly, SBA Communications exited third-quarter 2017 with atotal of 26,764 towers of which 15,959 are domestic and 10,815 are international towers.

At the end of the third quarter of 2017, Cincinnati Bell had 0.1876 million residential voice lines, declining 8.4% year over year and 0.3240 million business voice lines, increasing 1.6% year over year. Long distance lines were 0.2991 million, reflecting a decline of 7.6%. DSL Internet subscribers were 0.0867 million, down 24.1%. Fioptics Internet customers were 0.2212 million, reflecting an increase of 19.2%. Fioptics video subscribers were 0.1435 million, increasing 7.6% year over year.

In the reported quarter, Qualcomm shipped approximately 220 million CDMA-based MSM (Mobile Station Modem) chipsets, reflecting an increase of 4.1% year over year. This also came in above the midpoint of 215 million, which was the fourth-quarter chipset outlook given by management earlier. The company is currently engaged in serious royalty related battle with Apple Inc. AAPL. Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shaw Communications added a net 29,089 postpaid wireless customers, 11,925 prepaid wireless customers, 7,576 residential cable video subscribers, 6,332 residential satellite TV subscribers and 22,045 residential high-speed Internet customers. However, it lost 4,535 digital phone subscribers. For the business segment, Shaw Communications lost 2,483 cable video customers but gained 544 satellite TV customers. Further, the company lost 2,065 high-speed Internet subscribers, while it added 7,562 digital phone subscribers.

Telefonica’s mobile access decreased 0.8% to 272.7427 million customers on a year-over-year basis. Total Internet and data access dropped 0.2% to 21.6967 million users. Pay-TV access totaled 8.3758 million, down 0.2% year over year. LTE customer count was 88.9787 million, surging 55.2% year over year, and accounting for 34.6% of total mobile accesses. FTTx/cable access was 10.5118 million, increasing a substantial 20.8% on a year-over-year basis. Broadband access was 21.2438 million, inching down 0.1% year over year.

Read the last Telecom Stock Roundup for Oct 27, 2017.

Recap of the Week’s Most Important Stories

1.    American Tower’s quarterly adjusted funds from operations (AFFO) of $748 million were up 16.6% year over year.  AFFO per share was $1.73, increasing 16.1% from the year-ago quarter. Moreover, AFFO per share of $1.73 surpassed the Zacks Consensus Estimate of $1.67. Total revenues of $1,680.77 million increased 10.95% year over year, beating the Zacks Consensus Estimate of $1,679.2 million. (Read more: American Tower Tops Earnings & Revenue Estimates in Q3)

2.    Net income of SBA Communications’ in the third quarter of 2017 was $49.2 million or 41 cents per share against net loss of $15.4 million or a loss of 12 cents per share in the year-ago quarter. After adjusting for non-recurring gains, earnings per share (EPS) in the reported quarter were 26 cents, a penny better than the Zacks Consensus Estimate.Total revenues of approximately $434 million increased 5.5% year over year, outpacing the Zacks Consensus Estimate of $431.4 million. (Read more: SBA Communications Beats on Q3 Earnings and Revenues)

3.    On a GAAP basis, quarterly net loss of Cincinnati Bell came in at $13.8 million or a loss of 33 cents per share against net income of $16.2 million or 38 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share were 3 cents surpassing the Zacks Consensus Estimate of a loss of 2 cents. Quarterly total revenues of $289.2 million were down 7% year over year. However, the figure beat the Zacks Consensus Estimate of $286.3 million. (Read more:  Cincinnati Bell Beats Q3 Earnings, Revenue Estimates)

4.    On a GAAP basis, quarterly net income of Qualcomm came in at $168 million or 11 cents per share compared with $1,599 million or $1.07 in the year-ago quarter. Adjusted earnings per share (excluding special items) were 92 cents, well ahead of the Zacks Consensus Estimate of 81 cents. Quarterly total revenues of $5,905 million decreased 4.6% year over year. However, it surpassed the Zacks Consensus Estimate of $5,780.5 million. (Read more:  Qualcomm Beats Q4 Earnings and Revenues Estimates)

5.    Shaw Communications’ net income from continuing operation came in at $384 million, reflecting a massive 262.3% year-over-year increase. Adjusted EPS of 24 cents outpaced the Zacks Consensus Estimate by a penny. Total revenues came in at $992 million, reflecting a decrease of 1% year over year and missing the Zacks Consensus Estimate of $999 million. (Read more:  Shaw Communications Beats on Q4 Earnings, Revenues Lag)

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

-4.24%

3.38%

T

-6.70%

-14.84%

S

-7.22%

-29.11%

TMUS

-3.57%

-12.91%

CHTR

-3.73%

-0.01%

TEF

0.96%

-7.26%

AMX

-10.55%

11.10%

CMCSA

-5.56%

-10.65%

DISH

-2.09%

-23.59%

 

In the last five trading sessions, share price movement of the major telecom stocks was negative barring Telefonica. All four U.S. national telecom carriers, Verizon, AT&T, T-Mobile US and Sprint together with Mexican telecom giant America Movil lost significant value in the last week.

Major pay-TV operators like Comcast, Charter Communications and DISH Network also followed suit. Likewise, price performances of most of the major telecom stocks witnessed a negative trend in the last six months. While America Movil gained substantially, Sprint, DISH Network, AT&T, T-Mobile US and Comcast lost significantly in the same time frame.  

What’s Next in the Telecom Space?

Next week will be flooded with a series of third-quarter 2017 earnings results from the telecom sector. Big names like DISH Network, CenturyLink, TELUS, Telephone and Data Systems, United States Cellular, Windstream, Cable ONE and Infinera will post their financial numbers. The market will keep a close watch their quarterly results to assess industry dynamics and growth prospects.

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American Tower Corporation (REIT) (AMT): Free Stock Analysis Report
 
SBA Communications Corporation (SBAC): Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
Telefonica SA (TEF): Free Stock Analysis Report
 
Cincinnati Bell Inc (CBB): Free Stock Analysis Report
 
Shaw Communications Inc. (SJR): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
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