Telecom Stock Roundup: AT&T's Live TV Launch, Ericsson's Spectrum Sharing & More
Zacks Investment Research | Mar 05, 2020 07:48AM ET
In the past five trading days, telecom stocks mirrored the broader equity indices and exhibited a roller-coaster ride. The stocks initially trended down as the coronavirus pandemic continued to be a spoilsport, recovering remarkably as the market factored in the possibility of an interest rate cut by the Fed. However, an untimely mid-week Fed decision to slash the benchmark interest rate by half a percentage point to the range of 1-1.25% triggered a broad-based sell off, and the telecom stocks were not immune to it.
The death toll in the United States has swelled to double figures. This has disrupted normal business operations and supply-chain mechanisms of various companies as they preferred to exercise caution and put on hold their delivery schedules to and from China and other countries like South Korea until the health risks are neutralized. This, in turn, has triggered insecurity within the industry, inducing a downtrend. With 159 positive cases confirmed in the United States to date, the markets remained apprehensive about possible repercussions.
The markets had a brief reprieve and surged in anticipation of an integrated effort by the world’s largest economies to stem the rout. However, an unscheduled emergency rate cut reignited the worst possible fears of recession being just around the corner. This feeling of uncertainty prompted panic selling across the board and led to a slide in all the leading benchmark indices with investors parking their money in the safe haven of government debt.
Meanwhile, the Senate has unanimously passed the Secure and Trusted Communications Networks Act of 2019. The bill, which includes $1 billion in funding to help smaller rural telecoms to “rip and replace” existing equipment from manufacturers like Huawei, which are deemed to be a threat to national security interests, has now moved to President Trump for his approval. This has offered European telecommunications equipment manufacturers like Nokia (HE:NOKIA) and Ericsson (BS:ERICAs) an opportunity to fill the void and executives of both the firms reportedly made a solid presentation to reassure U.S. lawmakers that their 5G gear is safe and secure for nationwide deployment.
Regarding company-specific news, launch of live TV service, spectrum sharing solution, amended merger agreement, IoT Expansion and contract primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. After a successful pilot survey in 13 markets, AT&T Inc. (NYSE:T) has launched a new live TV service across the country, aiming to reverse the trend of video subscriber loss in its pay-TV bouquet. Dubbed AT&T TV, the product will aid the company to play catch-up with avant-garde media firms like Netflix (NASDAQ:NFLX), Inc. and The Walt Disney Company (NYSE:DIS) to secure a bigger pie of the streaming service market.
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Powered by Android TV set-top box, this broadband-delivered service offers a plethora of live TV channels, 500 hours of DVR storage space and 40,000 on-demand titles that can be streamed on a mobile device anywhere in the country. This is likely to enable users to either stream their favorite content on-the-go or record innumerable shows to watch later. (Read more: Zacks Investment Research
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