Telecom Stock Roundup: Comcast Posts Strong Q4, Mixed Bag For Verizon, Crown Castle

The telecom industry witnessed strong performances by most of the key stocks last week.

On the earnings front, U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) reported mixed financial numbers in the fourth quarter of 2017. While the top line beat the Zacks Consensus Estimate, the bottom line lagged the same.

In the reported quarter, the company gained 1.174 million postpaid customers but lost 0.184 million prepaid customers. Quarterly retail postpaid churn rate was 1.00% compared with 1.10% in the year-ago quarter. Verizon also lost 29,000 FiOS video subscribers and 15,000 FiOS digital voice residential connections while gaining 47,000 FiOS Internet subscribers.

Moreover, Verizon recently completed the acquisition of Movildata Internacional, a Spain-based leading provider of commercial fleet management solutions. In addition to Spain, Movildata will help Verizon to expand its telematics footprint in Portugal and Italy.

Comcast Corp. (NASDAQ:CMCSA) , the largest cable multi-service operator, reported impressive financial results in the fourth quarter of 2017, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate. The company gained a net of 350,000 high-speed Internet customers and 52,000 security and automation customers, but lost 13,000 voice customers and 33,000 video customers in the reported quarter.

Moreover, Comcast plans to strengthen the services it offers to small and mid-sized businesses (SMBs) leveraging on its wireless network. The company is rolling out a new product, Connection Pro, which will enable SMBs to keep their businesses running in case of a power failure or loss of web connectivity.

Leading wireless tower operator Crown Castle International Corp. (NYSE:CCI) also reported mixed fourth-quarter 2017 results. The top line beat the Zacks Consensus Estimate, while the bottom line missed the same. Nevertheless, the company raised its 2018 financial outlook.

Apart from earnings, in a major relief to Qualcomm Inc. (NASDAQ:QCOM) , the EC (European Commission), the regulatory authority of the European Union, gave its nod to the company for the acquisition of NXP Semiconductors NV (NASDAQ:NXPI) with some restrictive conditions. The major positive of the contract is that it will enable Qualcomm to diversify its business model.

The takeover will also push Qualcomm up the ranks to the second position after Intel Corp. (NASDAQ:INTC) in terms of sales in the broader global semiconductor market. Qualcomm carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In a separate development, T-Mobile US Inc. (NASDAQ:TMUS) recently completed the acquisition of Layer3 TV. The buyout is likely to help T-Mobile US proceed with the launch of TV streaming services in 2018. Layer3 TV is a cable company operating in Chicago, Washington DC, and Los Angeles. It combines TV, streaming online video content and social media content under one platform.

Read the last Telecom Stock Roundup for Jan 18, 2018.

Recap of the Week’s Most Important Stories

1. Quarterly-GAAP net income of Verizon was $18,783 million compared with $4,600 million in the year-ago quarter. Adjusted earnings per share of 86 cents lagged the Zacks Consensus Estimate of 88 cents. Total revenues increased 5% year over year to $33,955 million, which beat the Zacks Consensus Estimate of $33,145.7 million. (Read more: Verizon Q4 Earnings Miss, Revenues Beat Estimates)

2. Comcast’s GAAP net income was $15,035 million compared with $2,417 million in the prior-year quarter. Quarterly adjusted earnings per share of 49 cents beat the Zacks Consensus Estimate of 47 cents. The company’s total revenues were $21,915 million, increasing 4.2% year over year and outperforming the Zacks Consensus Estimate of $21,804 million. (Read more: Comcast Beats Earnings, Revenue Estimates in Q4 )

3. Crown Castle reported quarterly earnings per share of 17 cents, which lagged the Zacks Consensus Estimate of $1.06. GAAP net loss came in at $98 million, 22% narrower than the year-ago figure. Total revenues in fourth-quarter 2017 increased 19.9% year over year to $1,238.09 million, which surpassed the Zacks Consensus Estimate of $1,147.3 million. (Read more: Crown Castle Q4 Earnings Lag Estimates, Revenues Beat)

4. On Oct 27, 2016, Qualcomm had entered into a definitive agreement with the Netherlands-based mobile chipset giant for the latter’s acquisition. Per the deal, the largest mobile chipset manufacturer would be paying $110 per NXP Semiconductors share in cash, reflecting an enterprise value of approximately $47 billion (equity value of $39 billion) for NXP Semiconductors. (Read more: Qualcomm Gets EC Approval for NXP Semiconductors Deal)

5. More than 200 Layer3 TV employees and its executive personnel will work under T-Mobile US’ new television team, led by Layer3 TV's CEO Jeff Binder. Moreover, Binder has joined T-Mobile US as Executive Vice President and is part of the Senior Leadership Team. While plans for the TV streaming service are on track, the existing Layer3 TV product will be available for demonstration or purchase in select T-Mobile US stores in Chicago, Dallas, Denver, Los Angeles and Washington, DC in the coming weeks. (Read more: T-Mobile US' Layer3 TV Buyout to Speed Up OTT Service Launch)

Price Performance

The following table shows the price movement of the major telecom stocks both in the last week and the last six months.

In the last five trading sessions, share price movement of most of the major telecom stocks witnessed a positive trend. America Movil, Charter Communications (NASDAQ:CHTR), Telefonica (MC:TEF) and Verizon gained significantly in the same time frame while Sprint and DISH Network (NASDAQ:DISH) lost substantially. Similarly, price performances of most of the major telecom stocks were predominantly positive in the last six months. However, Sprint and DISH Network suffered major reverses in the stock price, although Verizon gained attractively in the same time period.

What’s Next in the Telecom Space?

We expect heightened activities in the telecom industry over the next week as big names like AT&T (NYSE:T), Qualcomm and Chunghwa Telecom will release their fourth-quarter 2017 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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