Telecom Stock Roundup: US-China Trade Woes Ease, Net Neutrality Raises Concern
Zacks Investment Research | May 16, 2018 09:13PM ET
Over the last five trading days, though telecom stocks initially witnessed a steep rise as U.S.-China trade concerns abated, concerns over the implications of Senate’s approval to retain net neutrality played spoilsport.
Last week, President Trump made a sudden turnabout by acknowledging in a Twitter post that he was working with the Chinese President Xi Jinping to give ZTE (HK:0763) “a way to get back into business, fast”, after its operations crippled following a seven-year ban on sale of various components for illegally shipping goods to Iran. Industry experts believed that the strategic move by one of the most vocal supporters of national security and job protectionism was probably aimed at gaining much in return as various U.S. firms depended on China for their survival. They opined that ZTE was perhaps used as a pawn to seek favorable trade concessions like annulment of proposed tariffs on American agricultural exports and free access to the Chinese markets.
As concerns across the global borders subsided, domestic issues came to the forefront when the U.S. Senate voted in favor of reversing the FCC decision in December to repeal landmark 2015 net neutrality rules by a margin of 52 to 47. This offered a level playing field for all Internet providers to ensure free and open Internet to all users and provide equal access to Web content by barring broadband service providers from favoring any particular content. However, uncertainty remains over whether the U.S. House of Representatives will at all vote on the issue as the White House is reportedly opposed to repealing the December FCC order.
Regarding company-specific news, earnings of some telecom companies along with push for increased coverage for 5G technology topped the charts. The industry’s earnings in general were on strong footing backed by healthy growth dynamics thanks to the existing secular trends in cloud computing, artificial intelligence and Big Data.
Recap of the Week’s Most Important Stories
1. CenturyLink, Inc. (NYSE:CTL) reported mixed results for first-quarter 2018, the first full quarter of operations following the acquisition of Level 3. The company’s adjusted earnings were 25 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 15 cents.
Total operating revenues increased 41% year over year to $5,945 million, due to incremental revenues from Level 3. The top line, however, missed the Zacks Consensus Estimate of $5,963 million. (Read more: Original post
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