Telecom Stock Roundup: Ericsson, Nokia Extend 5G Commercial Deals & More
Last week, U.S. telecom stocks took a roller coaster ride, mirroring the broader benchmark, as the Trump administration continued to put pressure on China-based companies by imposing various trade restrictions. The government remained determined to remove Chinese apps from the US mobile app marketplaces, and even attempted to appeal the federal court's decision. However, the continued investment by leading airlines to increase their fiber footprint in rural areas to bridge the digital divide has removed some negative volatility and appears to build confidence in the distressed sector.
Despite the ongoing negotiations to iron out the fine print of the TikTok deal, some issues remained unsolved, adding some level of uncertainty to the sector. These include concerns about data security, Chinese participation in the new TikTok Global, and an alleged education fund. With the presidential election coming up, the deal is likely to move at a snail's pace, risking closing within the November 12th deadline.
Problems in the industry were compounded by the fact that the U.S. Department of Justice reportedly appealed a federal court decision imposing a government ban on downloading the popular Chinese app WeChat from U.S. app stores. In particular, the US Department of Commerce attempted to ban WeChat because it was allegedly used as a cyber espionage tool to gain access to sensitive US data. However, US Judge Laurel Beeler dismissed the charges and delayed the restrictions, citing users' initial customization rights. With a legal battle on the cards, the industry rightly appeared a little nervous.
Meanwhile, China-based chipmaker Semiconductor Manufacturing International Corporation has held a "preliminary exchange" with the US Bureau of Industry and Security about the export restrictions it has been imposed. To minimize the adverse effects on the supply chain mechanism that will lead to a likely production cut, the company is working with local regulators and expects the safety concerns to be addressed at the earliest.
In addition, healthy infrastructure investments by telecom companies large and small to increase rural fiber coverage have sparked renewed excitement within the sector. Rural customers are increasingly concerned with the flexibility and network speed of their connection, not just reliability and price, which increases the demand for more reliable wired Internet connections. This in turn has resulted in a significant increase in new rural LTE wireless Internet service from leading telecommunications companies like Verizon Communications as rural coverage expanded to 189 markets in 48 states.
In terms of company-specific news, the focus was on 5G delivery, collaboration, and product launches over the past five days of trading.
Review of the week's most important stories
1. Ericsson ERIC has gotten a rift when it comes to 5G network technology. The Sweden-based telecommunications equipment company currently has 111 commercial 5G contracts with communications service providers, 60 of which will be publicly announced. In fact, it has 65 live 5G networks in 33 countries.
The company recently announced the extension of its longstanding partnership with Bharti Airtel, India's largest integrated telecommunications company. Ericsson has signed a new multi-year contract for the provision of a radio access network and transport solutions in the operator's network. This agreement follows an India-wide managed services contract that was extended in July 2020.
2. Nokia Corporation NOK has signed 100 5G contracts with communications service providers, which is a major achievement in the highly competitive market. The Finland-based telecommunications equipment maker has signed a total of 160 5G contracts with operators, from deals to paid testing. There are currently 34 public and private 5G live networks.
The company signed 17 new 5G contracts in the third quarter of 2020, underscoring its progress in strengthening its cellular product portfolio. Nokia has further developed its 5G portfolio, strengthened AirScale and further developed the functions of its ReefShark chipset. The aim is to accelerate product roadmaps and cost competitiveness through additional 5G investments in 2020.
3. ADTRAN, Inc. ADTN has partnered with OptiComm to deploy industry-leading XGS Passive Optical Network (PON) technology at ten gigabits per second for improved broadband connectivity in Australia. This solution enables the Australian-based company to upgrade first-generation GPON technologies.
The partnership is a boon for service providers, especially at a time when customers are increasingly dependent on virtual connectivity. It also increases network flexibility and provides high quality Internet using ADTRAN's high-end network implementation services. The alliance will help OptiComm achieve internet speeds of up to 10 Gbit / s.
4. Motorola Solutions, Inc. MSI has introduced CommandCentral Citizen Input, an innovative cloud-based service for business-critical environments. This solution is part of Motorola's avant-garde CommandCentral software suite, designed to protect first responders and citizens as they improve public safety infrastructure.
CommandCentral Citizen Input is an industry-leading application that supports Public Safety Response Points (PSAPs) to combine data and improve the safety of critical employees, even in stressful conditions. The solution is integrated with the call handling platforms VESTA 9-1-1 and CallWorks Call Station, which enable the flexible provision of CommandCentral Citizen Input in the USA in order to receive faster responses and improve situational awareness. In addition to securing investment in call handling, citizens can send photos and videos to the PSAP through approval-based and controlled procedures.
5. BlackBerry Limited BB announced a new unified global partner program that allows customers to differentiate their business while increasing revenue with the greatest flexibility. The program is a combination of the BlackBerry Cylance partner programs and the Enterprise partner program. Known as the ideal platform for corporate customers, it offers a variety of avant-garde options for cybersecurity and endpoint management.
The program gives more than 2,200 BlackBerry sales partners access to the entire BlackBerry portfolio. The program was developed with an integrated sales portal that provides direct access to optimized tools and resources in real time. This role helps maintain business continuity while supporting partners' go-to-market efforts.
Value for money
The following table shows the price movement of some of the major telecommunications stocks over the past week and six months.
In the past five trading days, Qualcomm was the top performer with shares up 4.3%, while both T-Mobile and Lumen were down 0.1%.
Over the past six months, Qualcomm was the top performer, its share price rising 41.8%, while AT&T saw the largest drop, falling 6.7%.
Over the past six months, the Zacks Telecommunications Services industry is up 3.7% and the S&P 500 is up 23%.
What's next in the telecommunications sector?
In addition to the 5G deployments and product launches, all eyes are on how the TikTok saga unfolds and whether President Trump approves the transaction or seeks to pull a political milestone out of it.
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Nokia Corporation (NOK): Free Stock Analysis Report
ADTRAN, Inc. (ADTN): Free Stock Research Report
Ericsson (ERIC): Free Stock Research Report
Motorola Solutions, Inc. (MSI): Free Stock Research Report
BlackBerry Limited (BB): Free Stock Research Report
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