Telecom Stock Roundup: AT&T Cancels Buyback Plan, Verizon Extends Reach, & More
Zacks Investment Research | Mar 25, 2020 10:15PM ET
Over the past five trading days, telecom stocks continued their steady descent in the aftermath of the coronavirus pandemic but managed to script a dramatic turnaround at the later stages as the U.S. government announced a $2-trillion economic stimulus package. The deadly virus outbreak has wreaked worldwide devastation, claiming countless lives and spooking financial markets. The industry is no exception and has been witnessing coronavirus-induced downtrend.
Although telecom firms, in general, are capable to withstand the near-term stock market bloodbath, with limited impact on credit quality owing to a recurring subscription-based business model, they remain vulnerable to the long-term recession effect. The severity and the extended duration of the virus outbreak are likely to have long-term credit implications for this capital-intensive industry. Consequently, with the availability of the government-backed stimulus package, the stocks sprang to their feet and moved northward.
The coronavirus pandemic has forced to shift almost everything in one’s life to the online domain — elementary schools, colleges, workplaces, shopping, dining, entertainment and even funeral — while users are forced to seek refuge in the safety of their homes to perform their daily chores. This, in turn, has increased the household broadband demand manifold, forcing the Federal Communications Commission (FCC) to grant additional airwaves to major wireless carriers on a temporary basis. The telecom firms have also worked in unison to handle the upsurge in broadband traffic and joined FCC’s "Keep Americans Connected Pledge", offering a vital lifeline to countless people whose lives have been crippled by this crisis.
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