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Telecom Stock Roundup: Strong Q4 for BCE while Charter Communications Disappoints, Verizon Eyes Yahoo Assets

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The last week was not among the happier ones for the telecom sector as all major stocks lost value on the bourse. Nevertheless, a few developments were worth noting.

On the earnings front, Canadian telecom firm BCE Inc. BCE reported strong financial numbers in the fourth quarter of 2015. Both the top and the bottom line surpassed the Zacks Consensus Estimate. The company added a net of 91,308 postpaid wireless, 38,908 high-speed Internet and 74,092 Fibe TV customers but lost 36,306 satellite TV subscribers in the quarter.

On the other hand, U.S. cable MSO (multi service operator) Charter Communications Inc. CHTR reported weak financial results in the fourth quarter of 2015, with both the top and the bottom line lagging the Zacks Consensus Estimate. Nevertheless, in the reported quarter, the company gained 29,000 video, 115,000 high-speed Internet and 47,000 voice customers within its residential segment and added 4,000 video, 14,000 high-speed Internet and 10,000 voice customers within its commercial segment.

Meanwhile, Level 3 Communications Inc. LVLT posted mixed financial results in the fourth quarter of 2015 wherein the bottom line met the Zacks Consensus Estimate while the top line missed the same. However, management provided a strong outlook for full-year 2016.

Apart from earnings news, a few significant developments also took center stage in the telecom sector last week. According to a recent Bloomberg report, U.S. telecom behemoth Verizon Communications Inc. VZ has assigned Tim Armstrong, chief executive officer of its AOL unit, the key task of exploring options to bid for the core assets of Yahoo! Inc. YHOO . However, neither company has confirmed the news as yet.

Recently, Lowell McAdam, CEO of Verizon, stated in a CNBC Mad Money show, that the company may opt for selected assets of Yahoo if the deal promises adequate value for its shareholders.

Additionally, U.S. telecom giant AT&T Inc. T is working closely with Nokia Corp. NOK on a new solution to help utilities in the U.S. build a private, safe, dependable and high-capacity 4G Long-Term Evolution (LTE) network. Notably, both the companies expect to make this offer accessible in the second half of 2016. Notably, the new solution brings together AT&T's spectrum alongside Nokia's LTE Technology.

Outside the U.S., Mexican telecom regulator Federal Telecommunications Institute (IFT or Ifetel) is set to conduct an auction for 80 MHz of wireless spectrum across various Advanced Wireless Services (AWS) bands, from Feb 15, 2016. The regulator has finally allowed America Movil S.A.B. AMX and AT&T to take part in the spectrum auction.

Read the last Telecom Stock Roundup for Feb 4, 2016 .

Recap of the Week's Most Important Stories

1. Quarterly net income of BCE was approximately $371.6 million, down 8.5% year over year. GAAP earnings per share were 43 cents, down 9.4% year over year. However, adjusted net income per ADS (American Depositary Share) came in at 53 cents, above the Zacks Consensus Estimate of 51 cents. Total revenue was approximately $4,198 million, up 1.4% year over year and ahead of the Zacks Consensus Estimate of $3,953 million. (Read More: BCE Tops Q4 Earnings & Revenue Estimates, Ups Dividend .)

2. Charter Communications' GAAP net loss in the fourth-quarter 2015 came in at $122 million or $1.09 per share compared with a net loss of $48 million or a loss of 44 cents per share in the year-ago quarter. Quarterly loss per share of $1.09 was significantly wider than the Zacks Consensus Estimate of a loss of 12 cents. Total revenue of $2,512 million increased 6.4% year over year, missing the Zacks Consensus Estimate of $2,519 million by a small margin. (Read More: Charter Communications Posts Q4 Loss, Revenues Miss Mark .)

3. On a GAAP basis, net income of Level 3 Communications in the fourth-quarter 2015 was $3,323 million, or $9.24 per share compared with net income of $66 million, or 21 cents per share in the fourth quarter of 2014. Meanwhile, adjusted (excluding non-recurring gains and charges) earnings per share of 52 cents were exactly in line with the Zacks Consensus Estimate. Quarterly total revenue improved 7.3% year over year to $2,053 million but fell short of the Zacks Consensus Estimate of $2,068 million. (Read More: Level 3 Communications: Earnings in Line, Revenues Miss .)

4. Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. The acquisitions of AOL and Millennial Media have enabled Verizon to sell digital media services to large companies and social media firms by monetizing its massive wireless customer base. With an Internet giant like Yahoo in its kitty, Verizon can potentially gain a strong and extensive foothold in the global online content and advertising market. (Read More: Verizon Communications: Is a Yahoo Buyout in the Cards? )

5. The Mexican telecom regulator - IFT - had initially considered restricting America Movil and AT&T from taking part in the upcoming AWS spectrum auction. While America Movil is the undisputed leader in the Mexican wireless market, AT&T currently possesses more spectrums in AWS bands than any other wireless operator in the country. These were the primary reasons cited by the IFT for barring the two firms from offering bids. However, the regulator has finally relented, following which these telecom giants will now be able to participate in the spectrum auction. (Read More: Mexico to Commence AWS Spectrum Auction in February .)

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 -1.26% 8.51%
T -0.79% 7.75%
S -4.23% -29.17%
TMUS -9.83% -16.64%
VOD -7.03% -21.39%
CHL -4.52% -18.74%
AMX -11.27% -34.24%
CMCSA -3.51% -5.29%
DISH -16.68% -40.95%

Over the past week, all major telecom stocks have lost value. This was in line with the broader market movement as S&P 500 index lost 3.17% in the same time frame. The continuation of the oil price slump and global macroeconomic headwinds - especially in China, together with the tech stocks' crash and the massive sell-off of financial stocks have rendered market conditions extremely volatile. DISH Network (16.68%), America Movil (11.27%) and T-Mobile US (9.83%) have been the biggest losersover the past five days.

Likewise, over the last six months, the price performance of key telecom stocks has been predominantly negative . DISH Network (40.95%), America Movil (34.24%), Sprint (29.17%), Vodafone (21.39%), China Mobile (18.74%) and T-Mobile US (16.64%) have depreciated substantially over the six-month period.

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 likely affect the industry in the coming week. However, T-Mobile US, DISH Network and Cincinnati Bell are among the big names that to release their fourth-quarter 2015 financial results. The market will closely evaluate these quarterly results in a bid to assess industry dynamics and future growth prospects.

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YAHOO! INC (YHOO): Free Stock Analysis Report

NOKIA CP-ADR A (NOK): Free Stock Analysis Report

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

LEVEL 3 COMM (LVLT): Free Stock Analysis Report

BCE INC (BCE): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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

CHARTER COMM-A (CHTR): 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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