Telecom Stock Roundup: AT&T Unveils 5G Strategy, Frontier's Asset Sale & More

In the past five trading days, telecom stocks mostly traded flat with a downward inclination owing to the continued market uncertainty triggered by a prolonged partial shutdown of the government. The downtrend was further caused by a draft executive order initiated by the Trump administration to restrain Chinese state-owned telecom firms from operating in the United States on national security concerns. The United States is reportedly mulling to seek extradition of Huawei CFO Meng Wanzhou from Canada before the Jan 30 deadline, to proceed with the legal charges. This probably added to the sector woes in the past week.

On the domestic front, the Trump administration is reeling under partial shutdown by various federal agencies for an all-time record of 33 days and counting. In addition to crippling the normal functioning of the government with furloughs and pay freeze, the impasse has led to unavailability of adequate funds for the speedy deployment of 5G technologies. The shutdown has even hampered FCC’s equipment authorization process, compounding industry fears that the deadlock could jeopardize the country’s edge in the upcoming 5G boom.

To make matters worse, the government is supposedly preparing an executive order that could give sweeping powers to the Commerce Department to review imported products by domestic firms and ban the outright sale of such equipment on grounds of national security interests. Industry observers feel that it could ultimately serve as a death-bell to some Chinese telecom firms and make it virtually impossible for them to operate in the U.S. shores if the bill is passed by the President.

Despite the conundrums, both the United States and China have continued with their trade negotiations to seek a long-term solution to the trade war. The bilateral trade talks between U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu is also scheduled later this month. However, the diplomatic ties continue to be under severe stress as reports emerge that the United States is considering to formally request the extradition of Meng from Canada to pursue a criminal case against her for alleged trade secret theft. Some industry experts believe that the strategic move could be a ploy by the Trump administration to seek a hard bargain from China. Although the warring countries have maintained that the issue would not deter the trade talks, there is no denying of the fact that tense undercurrents have prevailed over both sides.

Regarding company-specific news, strategic corporate actions, divestments, product launches and technology collaborations took the center stage over the past five trading days.

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1. AT&T Inc. (NYSE:T) has yet again proved its unconventional ‘out-of-the-box’ thinking, which helped it evolve from a telecom firm to a leading player in the U.S. communications sector, with a public view of its 5G strategy. As the first carrier in the industry, the company recently unveiled its 5G policy framework that will hinge on three pillars — mobile 5G, fixed wireless and edge computing.

The company aims to address the diverse needs of the business through this holistic approach and better serve the surging consumer base. At the same time, AT&T is developing a robust network to enable fiber-based connectivity and LTE to work in unison with 5G solutions and services, thereby facilitating the radical transformation of business. (Read more: Zacks Investment Research

Written By: Zacks Investment Research