Telecom Stock Roundup: Qualcomm Wins EU Battle, AT&T's Streaming Service & More

In the past five trading days, telecom stocks witnessed a gradual uptrend on the anticipation of a breakthrough in the elusive trade deal between the United States and China. As the bilateral trade talks resumed on a positive note, efforts were on to iron out the key issues that derailed the negotiations before. However, both the countries remained circumspect in their approach and seemed eager to walk the extra mile to prevent any further slipups. Despite the element of caution, the thaw in the Sino-U.S. relationship is expected to buoy the industry that has borne the brunt of the tariff war. Moreover, easing of some of the trade restrictions on Chinese telecom equipment manufacturer Huawei brought a sense of relief to several U.S. suppliers, and propelled the industry as a whole.

After a two-month hiatus, U.S. trade representative Robert Lighthizer and treasury secretary Steven Mnuchin spoke with Chinese vice premier Liu He and commerce minister Zhong Shan over the phone to mark the beginning of the latest round of negotiations. Despite ‘constructive’ talks, no official details about the venue and the nature of the next level of communication were made available. Moreover, it still remained uncertain whether the two sides would resume their dialogue from the draft text agreed before the pull back or use a different starting point for the proceedings.

Furthermore, the Trump administration offered some clarity on the proposed trade relaxations against Huawei. Commerce secretary Wilbur Ross revealed that the government would issue licenses to firms that intend to sell such goods to Huawei that are not deemed to be threat to national security. Without clarifying about the exact list of goods that are likely to pass the government scrutiny as Huawei continues to be in the Entity List, the official announcement left various U.S. chipmakers unsure about their chances of making the final cut. To add to the woes, White House economic adviser Larry Kudlow revealed that the relaxation of trade restrictions was only applicable for a limited period of time.

Meanwhile, the U.S. Federal Communications Commission was voted by a 3-2 margin to auction a key underused 2.5 GHz mid-band spectrum for 5G wireless networks. Hitherto reserved for use as the Educational Broadband Service, the spectrum was leased by Sprint Corporation for its existing 4G network and upcoming 5G deployment. The purported move is likely to offer greater flexibility to carriers for extensive 5G deployment across the country, although it was criticized to be “uninspired and stale commercial spectrum policy” that hindered the use of the spectrum by schools and other educational institutions.

Regarding company-specific news, streaming service roll out, 5G deployment, asset sale, collaborations and organic expansion primarily took the center stage over the past five trading days.

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Recap of the Week’s Most Important Stories

1. Leading chip maker Qualcomm Incorporated (NASDAQ:QCOM) , together with Deutsche Telekom (DE:DTEGn) and BMW has won an enduring legal battle over the use of 5G technology in vehicles across Europe, per Bloomberg. The triumph came after European Union member states repudiated prevailing rules that proposed WiFi-based technology for future connected cars.

Qualcomm and its business allies said that it was vital for the automotive industry to have the freedom to adopt a range of technologies for Internet-connected cars in a sector, which is estimated to be worth billions of euros a year. The comment followed a similar push by trade associations through a letter to all 28 European Union member states. (Read more: Zacks Investment Research

Written By: Zacks Investment Research