Telecom Stock Roundup: Cable TV Consolidation Continues, BlackBerry Posts Mixed Q4 - Analyst Blog

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Last week witnessed many significant developments in the telecom industry. Troubled smartphone developer BlackBerry Ltd.BBRY reported mixed financial results in the fourth quarter of fiscal 2015. While total revenue fell below the Zacks Consensus Estimate, the company posted earnings in contrast to the Zacks Consensus Estimate of loss.

On the cable TV front, mergers are on full swing and the latest companies to jump on the bandwagon are Charter Communications Inc.CHTR and Bright House Networks LLC. Charter has decided to takeover Bright House, however, the deal is subject to several stringent conditions. Meanwhile, Windstream Holdings Inc.WIN has received the final nod from its board for the spin-off of some of its select assets into an independently publicly traded real estate investment trust (REIT).

On the other hand, American Tower Corp.AMT completed the acquisition of leasing rights of nearly 11,324 wireless towers from Verizon Communications Inc.VZ . Moreover, AT&T Inc.T recently launched a new WiFi-Small Site service for small and mid-sized business (SMB). (Read the last Telecom Stock Roundup for Mar 26, 2015 .)

Recap of the Week's Most Important Stories

1. BlackBerry reported mixed financial results for the fourth quarter of fiscal 2015. GAAP loss from continuing operations in the fourth quarter of fiscal 2015 came in at $28 million or 5 cents per share compared with $423 million or loss of 80 cents per share in the year-ago quarter.

However, adjusted net income per share of 4 cents compared favorably with the Zacks Consensus Estimate of a loss of 3 cents per share. Total revenue in the reported quarter stood at $660 million against $976 million in the year-ago period. The top line also lagged the Zacks Consensus Estimate of $833 million. (Read More: BlackBerry Q4 Earnings Beat Estimates, Revenues Lag .)

2. Recently, the board of directors of Windstream gave the final approval for the tax-free spin-off of select telecommunications network assets of the company to become an independent publicly traded REIT. The new company will be called Communications Sales & Leasing Inc. and will trade on Nasdaq under a ticker symbol of "CSAL." The financial synergies arising from the divestiture will allow the company to expand the availability of 10 Mbps Internet service to more than 80% of its customers by 2018. (Read More: Windstream's REIT Spin-off Gets Final Nod from Board .)

3. Recently, Charter Communications announced the signing of a definitive agreement with media group Advance/Newhouse to acquire a majority stake in Bright House Networks, the sixth largest cable TV operator in the U.S. Bright House currently serves about 2.5 million cable subscribers. The total consideration of the deal stands at $10.4 billion.

The merged entity will be recognized as a partnership business of which Charter Communications will hold a 73.7% stake and the remaining 26.3% will be owned by Advance/Newhouse, the current owner of Bright House. Charter Communications will issue $8.4 billion worth of common and preferred stocks of the partnership to Advance/Newhouse along with $2 billion in cash. (Read More: Charter Communications to Acquire Bright House Networks .)

4. American Tower recently closed the deal of acquiring leasing rights to approximately 11,324 wireless towers and purchasing 165 additional towers from Verizon. The deal, valued at $5.06 billion, was announced in Feb 2015. This deal will provide American Tower with the exclusive right to operate the leased towers for an average term of around 28 years with an option to buy them as well.

At the end of 2014, American Tower managed 75,164 communication towers. Geographically, the company operates 28,566 wireless towers in the U.S. and 46,598 wireless towers outside the U.S. (Read More: American Tower Completes $5.06B Deal for Verizon Towers .)

5. AT&T recently launched an innovative WiFi-Small Site service for SMBs. AT&T will provide the enterprise a dedicated self-installed access point using which the business entity will offer free public WiFi connectivity to their customer's. This network will be completely separate from the enterprise's internal WiFi network set-up.

The business entity will be able to gather useful information about customers from the dedicated WiFi network which will help it to boost future business prospects. The WiFi-Small Site will run on the enterprise's existing connections with a minimum speed of 6 Mbps. (Read More: AT&T Enhances SMB Services with Small-Scale WiFi .)

Price Performance

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

Company Last Week Last 6 Months
VZ +0.39% +1.26%
T +0.83% -3.32%
S -0.63% -24.32%
TMUS -2.16% +12.56%
VOD -1.59% +1.52%
CHL +0.31% +13.15%
AMX +2.60% -12.40%
CMCSA +1.39% +8.71%
DISH -1.46% +9.64%

Over the last five trading sessions, share price movement of major telecom stocks was mixed. While America Movil SABAMX gained a good number, T-Mobile US Inc.TMUS depreciated the most. However, over the last six months, the price performance of key telecom stocks was predominantly positive . Although Sprint Corp.S and America Movillost a considerable 24.32% and 12.40%, respectively, China Mobile Ltd.CHL gained 13.15% and T-Mobile US gained 12.56% over the same time frame.

What's Next in the Telecom Sector?

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. Therefore, we expect stocks to trade in line with the broader market movement.

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AMER TOWER CORP (AMT): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

SPRINT CORP (S): Free Stock Analysis Report

AMER MOVIL-ADR (AMX): Free Stock Analysis Report

WINDSTREAM HLDG (WIN): Free Stock Analysis Report

CHINA MOBLE-ADR (CHL): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

CHARTER COMM-A (CHTR): Free Stock Analysis Report

T-MOBILE US INC (TMUS): Free Stock Analysis Report

BLACKBERRY LTD (BBRY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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