Last week, all major telecom stocks lost their value along with tech and utilities stocks owing toFederal Reserve Chairwoman Janet Yellen’s warning to investors over higher stock valuation. Additionally, first-quarter 2015 earnings results of most of the telecom stocks were disappointing barring some notable exceptions.
Cable MSOs (multi service operator) Time Warner Cable Inc (NYSE:TWC) and Charter Communications Inc (NASDAQ:CHTR), the largest satellite-TV operator DIRECTV (NASDAQ:DTV), national telecom operator Sprint Corp (NYSE:S) and regional telecom service providers Telephone and Data Systems Inc (NYSE:TDS) and Frontier Communications Corp (NASDAQ:FTR) reported dismal Q1 results wherein both the top and the bottom line lagged the respective Zacks Consensus Estimate.
On the other hand, cable MSO Comcast Corp (NASDAQ:CMCSA) and Cablevision Systems Corp (NYSE:CVC) along with Canadian telecom operator BCE Inc. (NYSE:BCE) reported a strong Q1 results with earnings per share and total revenue outpaced the respective Zacks Consensus Estimate.
Meanwhile, regional telecom operators, United States Cellular Corporation (NYSE:USM) and CenturyLink Inc (NYSE:CTL) and wireless tower operator American Tower Corp (NYSE:AMT) posted mixed results in the first quarter of 2015. (Read the last Telecom Stock Roundup for Apr 30, 2015.)
Recap of the Week’s Most Important Stories
1. Comcast’s GAAP net income in the first quarter of 2015 came in at $2,059 million or 81 cents per share compared with $1,871 million or 71 cents in the prior-year quarter. Quarterly adjusted earnings per share of 79 cents outpaced the Zacks Consensus Estimate of 74 cents.
Meanwhile, total revenue stood at $17,853 million, up 2.6% year over year and also above the Zacks Consensus Estimate of $17,345 million. The company added a net of 407,000 High-Speed Internet customers and 77,000 Voice customers in the reported quarter. However, it lost 8,000 video subscribers in the same quarter. (Read More: Comcast Q1 Earnings, Revenues Top on Internet Strength.)
2. Cablevision Systems’ quarterly GAAP net income from continuing operations was $44.6 million or 16 cents per share compared with $89.8 million or 33 cents per share in the prior-year quarter. First-quarter adjusted earnings per share of 20 cents outpaced the Zacks Consensus Estimate of 17 cents.
Total revenue in the reported quarter came in at $1,614.8 million, up 2.5% year over year and also above the Zacks Consensus Estimate of $1,606 million. In the reported quarter, the company lost 28,000 video subscribers, 14,000 voice customers but gained 7,000 high-speed data users. (Read More: Cablevision Systems Tops Q1 Earnings, Revenue Estimates.)
3. Charter Communications’ GAAP net loss in the reported quarter stood at $81 million or 73 cents per share compared with a net loss of $37 million or 35 cents per share in the year-ago quarter. Quarterly, loss per share of 73 cents was in contrast to the Zacks Consensus Estimate of an income of 7 cents per share. First-quarter total revenue of $2,362 million was up 7.3% year over year but missed the Zacks Consensus Estimate of $2,375 million.
During the reported quarter, the company gained 125,000 high-speed Internet and 42,000 voice customers but lost 7,000 video subscribers. (Read More: Charter Communications Posts Loss in Q1, Revenues Lag.)
4. Time Warner Cable’s quarterly GAAP net income came in at $458 million or $1.59 per share compared with $479 million or $1.70 in the prior-year quarter. Quarterly adjusted earnings per share of $1.65 were significantly below the Zacks Consensus Estimate of $1.87.
Quarterly total revenue was $5,777 million, up 3.5% year over year but failed to meet the Zacks Consensus Estimate of $5,805 million.In first-quarter 2015, video subscriber count increased by 30,000, High-speed data subscribers rose by 315,000 and Voice subscribers grew by 320,000. (Read More: Time Warner Cable Lags on Q1 Earnings, Revenues.)
5. Sprint’s quarterly net loss stood at $224 million or 6 cents per share compared with a net loss of $151 million or 4 cents per share in the year-ago quarter. Fourth-quarter net loss per share of 6 cents was wider-than-the Zacks Consensus Estimate of a loss of 4 cents.
Quarterly total revenue came in at $8,282 million, down 6.7% year over year missing the Zacks Consensus Estimate of $8,446 million. In the reported quarter, Sprint gained 211,000 postpaid subscribers, 546,000 prepaid customers and 492,000 wholesale customers. (Read More: Sprint Q4 Loss Wider-than-Expected, Revenues Lag.)
Price Performance
The following table shows the price movement of major telecom players over the past week and the last six months.
Over the last five trading sessions, share price movement of all major telecom stocks was negative. Sprint lost the maximum value. However, over the last six months, the price performance of key telecom stocks was predominantly positive. Although America Movil (NYSE:AMX) lost a considerable 14.35%, T-Mobile US Inc (NYSE:TMUS) and China Mobile (NYSE:CHL) rallied a respective 17.50% and 13.77%, over the same time frame.
What’s Next in the Telecom Sector?
We expect activities in the telecom sector to intensify going forward as several telecom operators and cable MSOs are scheduled to release their first-quarter 2015 financial results. Notable among the companies are DISH Network Corp (NASDAQ:DISH)., TELUS Corporation (NYSE:TU), Windstream Holdings Inc., Cincinnati Bell Inc (NYSE:CBB), Liberty Global (NASDAQ:LBTYA) and SK Telecom Corporation (NYSE:SKM).