Zacks Industry Outlook Highlights: Verizon Communications, AT&T, T-Mobile US and Qualcomm

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For Immediate Release

Chicago, IL - May 11, 2016 - Today, Zacks Equity Research discusses the Telecommunications, including Verizon Communications Inc. ( VZ ), AT&T Inc. ( T ), T-Mobile US Inc. ( TMUS ) and Qualcomm Inc. ( QCOM ).

Industry: Telecommunications


The U.S. telecommunications industry is likely to witness reasonable growth through 2016. This industry has lately emerged as an intensely contested space where success thrives largely on technical superiority, the quality of services and scalability. Cut-throat pricing competition may put pressure on margins. Nevertheless, uninterrupted advancement in telecom technologies has helped telecom operators and equipment manufacturers adopt newer business models in order to boost revenues.

4G LTE Momentum Continues

Long-Term Evolution (LTE), the super-fast wireless communications technology, is gaining rapid momentum worldwide. 4G wireless networks primarily aim to cope with the substantial rise in demand for high-speed wireless data services and mobile video.

According to a research report published by the Global Mobile Suppliers Association (GSA), the number of LTE subscribers worldwide has crossed the 1 billion mark. In the fourth quarter of 2015 alone, LTE subscriptions grew by over 156 million. At this rate, 4G LTE is set to outnumber 3G (all forms of 3G technologies) subscribers globally by 2020. GSA further stated that in 2015 alone, 4G LTE generated a net 552.2 million subscription worldwide, reflecting a whopping 107% improvement year over year.

Moreover, as per a report by research firm IHS Infonetics, the LTE infrastructure market size has touched a record $13 billion in the fourth quarter of 2015, an improvement of 11% sequentially and 3% on a year-over-year basis.

Further Evolution of 4G LTE Technology

Wireless network standards are continuously evolving around the globe to offer faster speed. Following significant deployment of 4G LTE networks, LTE-A (Long-Term Evolution Advanced) wireless networks are gradually finding solid foothold globally. LTE-A is a more powerful version of the legacy LTE network offering increased speed and network capacity. The latest version of LTE-A network, which is popularly known as LTE-Advanced Pro (3GPP Release 13) will be a major step toward the smooth transition from 4G to the upcoming 5G network standard.

Upcoming 5G Wireless Technology

Several industry researchers hold that 5G network will provide a download speed of 1 Gbps (gigabit per second), which is 200 times the throughput of the currently available standard 4G LTE network. Latency period of data delivery will be in single milliseconds. Further, 5G technology is designed to be more power efficient than any other standard wireless networks available these days. Naturally, 5G-enabled mobile devices are likely to last much longer than their 3G or 4G counterparts.

According to the research firm ABI Research, 5G network deployment is expected to ramp up after 2020 and its market size may reach $247 billion worldwide by 2025. North America, Asia-Pacific, and Western Europe will be the three regions that will pioneer 5G network deployment.

As per a report from the research firm iGR, U.S. telecom operators will spend around $104 billion during 2015-25 to upgrade their existing 4G networks to 5G standards and thereafter, execute full installation of 5G wireless services. Consequently, telecom infrastructure developers will have enormous opportunity for growth.

U.S. telecom behemoth Verizon Communications Inc. ( VZ ) is currently conducting field trials for its upcoming 5G wireless network with its partners. The company is looking at mobile hotspot and fixed wireless for initial deployment of the next-generation 5G wireless networks in the U.S. in 2017. In Feb 2016, another U.S. telecom giant AT&T Inc. ( T ) requested the Federal Communications Commission (FCC) to grant a license to test 5G technologies. In Mar 2016, T-Mobile US Inc. ( TMUS ) sought the FCC's approval for a millimeter wave radio test license to conduct test run of 5G wireless standards. Leading mobile chipset manufacturer Qualcomm Inc. ( QCOM ) is working hard to develop chipsets for the 5G mobile standard.

Mobile Video Business Gaining Traction

Internet TV is gradually gaining a strong foothold in the U.S. The legacy pay-TV industry in the country has been facing severe competition from online video streaming service providers. The low-cost over-the-top video streaming service has resulted in massive cord cutting that is currently threatening the pay-TV business model.

Internet TV has emerged as a strong alternative to counter this competitive threat. At present, the web-based digital media market is growing rapidly. The digital media brands are gradually gaining significant market traction especially among the young generation. With demand for smartphones and tablets on the rise, target customers are increasingly watching videos online, preferring them over costlier legacy pay-TV connections.

New Growth Driver: Online Digital Advertisement

Advertisement on the mobile video platform is gradually shifting from simple selling of banner ads on the mobile web to automated or programmatic ad selling. Pay-TV operators are gradually adopting the data-driven advertising technique that is already popular in the web-based advertisement arena. To derive maximum synergies from the combined video content and video distribution platform, these companies are extensively penetrating into the advertising technology market.

Inclusion of dynamic ad-insertion, targeted audience advertising and data-driven TV advertisements are steps toward the same objective. According to market research company eMarketer, the global mobile ad market value is expected to reach $ $133.7 billion by 2017.

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VERIZON COMM (VZ): Free Stock Analysis Report

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

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

QUALCOMM INC (QCOM): 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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