Telecom Stock Roundup: T-Mobile's Nationwide 5G, Verizon 5G Edge Computing & More

In the past five trading days, telecom stocks witnessed a downtrend on President Trump’s hint that there is no specific deadline for the ongoing “Phase One” deal between the United States and China. On cue, the market went on a tailspin, dragging the telecom sector down as uncertainty and unpredictability took centerstage. With China issuing strong protests for U.S. legislations supporting Hong Kong protesters that reportedly meddled in so-called ‘internal affairs’, the outlook for the partial trade accord appeared murkier. However, the stocks showed some signs of a rebound in the later stages of the week as media reports confirmed that the deal was around the corner.

As the clock ticks on the imposition of a fresh round of U.S. tariffs on Dec 15 on $156 billion of imports from China, both sides are likely to seek an early resolution of the trade disputes on domestic compulsions. Although the optimism regarding the partial trade accord has been punctured with Trump hinting that the deal could spill off well in 2020, recent media reports have confirmed that the deal is to back on track.

Meanwhile, the Trump administration is planning to utilize $60 billion funds earmarked for the U.S. International Development Finance Corporation (“DFC”) to thwart China-based telecom equipment manufacturers Huawei and ZTE (HK:0763). The move is the latest in a string of concerted efforts by the U.S. government to dissuade other sovereign countries from using Huawei and ZTE gear to preempt alleged spying and siphoning of data. The United States has extensively used its diplomatic channels in the past to urge its allies to shun Huawei from their 5G wireless networks, citing security threat and espionage by China’s government. The government now seeks to undertake a more proactive measure to fructify its ploy by possibly leveraging DFC tools to support purchases of non-Chinese telecom gear by issuing credit to Huawei’s European rivals. Industry grapevines further hint that DFC could also take minority equity stake in companies and offer loans, loan guarantees and political risk insurance.

Huawei has vehemently opposed the unilateral steps by the U.S. authorities and has filed a lawsuit against the ‘unconstitutional’ ruling to ban the use of federal subsidies by rural firms to buy its equipment, urging the court to overturn the order. The company is also reportedly mulling to shift its U.S. operations to Canada against constant vigilantism and stiff opposition.

Regarding company-specific news, nationwide 5G launch, strategic collaboration, contract extension, and business update took the center stage over the past five trading days.

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1. T-Mobile US (NASDAQ:TMUS), Inc. (NYSE:T) has become the first telecom carrier to activate nationwide 5G network, covering nearly 200 million Americans in more than 5,000 cities and towns.

The only nationwide 5G network boasts an investment of $30 billion for network improvements, 25,000 new towers and cell sites with network coverage of 1 million square miles across the United States. Covering 60% of the U.S. population, T-Mobile’s 5G coverage utilizes longer range low-band 600 MHz spectrum, offsetting the shortcomings of millimeter wave networks like limited range and poor obstacle penetration. (Read more: Zacks Investment Research

Written By: Zacks Investment Research