Telecom Stock Roundup: T-Mobile US Offers Free Video Streaming, Liberty Global Eyes Cable & Wireless Communications
The last week was a favorable one for the telecom industry as most of the key stocks exhibited positive momentum despite the lack of much consequential developments. Among the events that caught the eye was T-Mobile US Inc.'s TMUS introduction of a free-of-cost video streaming service on mobile devices. The 'Binge On' service, as touted by the company, will provide access to 24 streaming servicesto all Simple Choice customers on qualifying plans, at no additional cost.
Meanwhile, U.K. cable MSO (multi service operator) Liberty Global plc LBTYA has reached an agreement to buy Caribbean cable operator Cable & Wireless Communications plc for approximately $8 billion, including debt. Notably, subject to necessary conditions and approvals, Liberty Global expects the deal to close in the second quarter of 2016.
Back at home, Verizon Communications Inc. VZ recently received a temporary go-ahead from the FCC for the rollout of its Wi-Fi Calling feature. In addition, regional wireline operator Frontier Communications Corp. FTR announced its 'Price for Life' plan which ensures no further escalation in price for the services provided to its business customers. The plan, which starts from $59.99 per month, is specifically targeted toward customers in the Small and Medium Businesses segment and is available for a limited period.
A recent report by Leichtman Research Group revealed that the third quarter of 2015 has turned out to be a mixed one for the U.S. pay-TV industry with sector participants having managed to consolidate their position despite stiff competition from online video streaming service providers. Although the industry continues to witness significant video subscriber losses, the rate of customer churn has narrowed considerably, translating into the best third-quarter performance since 2006 for the top nine cable MSOs in the space.
In a separate report, Leichtman Research Group concluded that the cable MSOs in the U.S. have successfully maintained their lead over telecom operators in the high-speed broadband (Internet) market. At present, cable MSOs commanded nearly 54.3 million subscribers (60.7%) while the remaining 35.2 million customers (39.3%) were serviced by telecom operators.
This apart, Mexican telecom regulator, the Federal Telecommunications Institute (IFT) recently announced that it will use the combinatorial clock auction (CCA) format for its upcoming AWS spectrum auction scheduled to start in Jan. 2016. The IFT has stated that the application of the CCA format will enable it to divide the frequencies into various slots so that participants can bid for different packages of spectrums as per their needs.
Read the last Telecom Stock Roundup for Nov 12, 2015 .
Recap of the Week's Most Important Stories
1. In a bid to lure customers away from rivals, T-Mobile US has been offering free video streaming and music streaming services on mobile devices. Moreover, as part of various initiatives to boost its mobile features, the company got rid of service contracts and has allowed users to roll over unused data into their next billing cycle.
Meanwhile, T-Mobile has made a massive update to its Simple Choice plan by doubling the amount of data available to its Simple Choice customers at all price points, and slashing the price of additional data purchase. (Read More: T-Mobile Intensifies Wireless Competition with Free Video Offer .)
2. The acquisition of Cable & Wireless will enable Liberty Global to boost its rapidly-growing operations in Latin America and the Caribbean region. Also, Liberty Global aims to gain from Cable & Wireless' extensive network of undersea cables in the region, which should let Liberty Global benefit from the rapid increase in broadband data consumption. Further, the combined operations will help Liberty Global achieve economies of scale. (Read More: Liberty Global Aims to Expand with Cable & Wireless Buyout .)
3. The Mexican government has decided to auction 80 MHz of wireless spectrum across various Advanced Wireless Services (AWS) bands. Of the total spectrums to be sold, 30 MHz will be for AWS-1 bands (1710-1725 MHz/2110-2125 MHz) while the remaining 50 MHz will be for AWS-3 bands (1755-1780 MHz/2155-2180 MHz). Notably, AWS spectrums are highly coveted for the deployment of 4G LTE networks. In 2014, the government of Mexico had introduced reforms within its telecommunications sector that led to intensifying competition. (Read More: Mexico to Implement CCA Format for AWS Spectrum Auction .)
4. According to a recent report by Leichtman Research, the top 13 pay-TV operators in the U.S. (which control around 95% of the overall market) lost over 190,000 net video subscribers in the third quarter of 2015 compared with a net loss of over 155,000 subscribers in the prior-year quarter. However, the top nine cable MSOs lost about 145,000 subscribers in the reported quarter against a loss of 440,000 subscribers in the year-ago quarter and a massive loss of 600,000 subscribers in the previous quarter. (Read More: Mixed Q3 for US Pay-TV Industry, Lower Churn at Cable MSOs .)
5. According to data compiled by Leichtman Research, in the third quarter, 10 major U.S. cable TV operators added a net of 787,629 high-speed Internet subscribers while 7 major telecom operators lost 143,338 net subscribers resulting in a total net subscriber addition of 644,291 for the broadband industry. Through the first nine months of 2015, the cable TV operators have gained around 2.3 million subscribers in contrast to a loss of about 130,000 subscribers on the part of the telecom operators. (Read More: Cable MSOs Maintain Lead in High-Speed Broadband Market .)
The following table shows the price movement of major telecom players over the past week and the last six months.
Last 6 Months
Over the last five trading sessions, the share price movement of most major telecom stocks was in the green. DISH Network Corp. DISH and America Movil SAB AMX gained 3.07% each during this period. On the other hand, over the last six months, the price performance of key telecom stocks has been predominantly negative . Sprint Corp. S , America Movil and China Mobile Ltd. CHL depreciated a substantial 17.05%, 15.84% and 10.43% respectively, 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 likely affect the industry in the coming week. However, certain housing data and the second estimate of the U.S. GDP is set to be released in the coming week which we believe will be closely monitored by investors for a peek into the current U.S. macroeconomic picture.
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