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Telecom Stock Roundup: DISH Network, Telephone and Data Systems and BCE Disappoint in Q2

Zacks

The telecom industry had a mixed run on the bourse last week. On the earnings front, DISH Network Corp. DISH, Telephone and Data Systems Inc. TDS, BCE Inc. BCE and Liberty Global plc. LBTYA reported disappointing second quarter results wherein both the top and bottom line fell shy of the Zacks Consensus Estimate. On the other hand, United States Cellular Corp. USM, Ceincinnati Bell Inc. CBB, Windstream Holdings Inc. WIN and Cable ONE Inc. CABO posted mixed Q2 results.

DISH Network lost 46,000 broadband subscribers in the reported quarter compared with a loss of 15,000 in the year-ago quarter. As of Jun 30, 2017, DISH Network had 509,000 broadband subscribers, down 17% year over year.

As of Jun 30, 2017, Telephone & Data Systems had 581,000 residential wireline connections compared with 590,200 in the year-ago quarter, 321,200 commercial wireline connections, down 4.1% year over year and total cable connections were 297,000, up 3.3% year over year. United States Cellular exited the second quarter of 2017 with a subscriber base of 5,023,000 compared with 5,031,000 at the end of 2016. Postpaid subscriber base totaled 4,478,000 compared with 4,482,000 at 2016-end. Meanwhile, prepaid subscriber base totaled 484,000, flat year over year.

In second-quarter 2017, BCE added a net of 88,611 postpaid wireless subscribers, increasing 26.9% year over year. As of Jun 30, Bell Wireless postpaid customers totaled 8,126,264, increasing 8.8% year over year, 2,824,016 TV subscribers, up 2.7% year over year.High-speed Internet customer base totaled 3,718,677, reflecting an increase of 8.8% year-over-year. BCE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


In the reported quarter, Liberty Global added a total of 161,900 RGUs, (revenue generating units) including net gains of 100,100 and 77,900 subscribers for broadband internet and telephony services, respectively. However, the company lost 16,100 video customers. Nonetheless, it added 5,800 mobile customers including a net gain of 98,700 postpaid subscribers and a net loss of 92,900 prepaid subscribers. In the reported quarter, Liberty Global added a net of 302,000 customers for its flagship Horizon TV-platform, Yelo TV platform and TiVo developed TV-platform.

At the end of the second quarter of 2017, Cincinnati Bell had 0.1919 million residential voice lines, decreasing 4.7% year over year and 0.3235 million business voice lines, up 0.3% year over year. Long distance lines were 0.3043 million, down 4.1%. DSL internet subscribers were 0.093 million, down 11.9%. Fioptics internet customers were 0.2141 million, up 8.4%. Fioptics video subscribers were 0.1428 million, up 3.8% year over year.

As of Jun 30, 2017, Windstream Holdings had 1.3078 million household customers, declining 6.8%. High-speed internet customer base was 1.0258 million, down 4.6% while the digital TV customer base was 0.3007 million, down 12.1%. ILEC small business customers totaled 0.1303 million, down 7.6%. Enterprise customers were 0.0346 million, down 4.4% year over year. CLEC consumer customers were 0.6497 million, decreasing 4.9% and CLEC small business customers were 0.0900 million, down 20.5%.

As of Jun 30, 2017, total residential customer base of Cable ONE was 601,883, down 1.4% year over year and business customer base was 53,426, up 7.6% year over year.

Read the last Telecom Stock Roundup for Aug 03, 2017.

Recap of the Week’s Most Important Stories

1. DISH Network’s quarterly net income came in at $40.1 million or 9 cents per share compared with $424.1 million or 91 cents in the year-ago quarter. Second quarter adjusted earnings per share of 69 cents fell shy of the Zacks Consensus Estimate of 76 cents. Total revenue in the reported quarter was approximately $3,643.6 million, declining 5.7% year over year and lagging the Zacks Consensus Estimate of $3,717 million. (Read more: DISH Network Q2 Earnings & Revenues Miss Estimates)

2. Quarterly net income of BCE was approximately $602.57 million, down 2.3% year over year. However, GAAP earnings per share were 84 cents, down 5.6% year over year. Adjusted net income per ADS (American Depository Share) came in at 65 cents, lagging the Zacks Consensus Estimate of 67 cents. Total revenue was approximately $4,235.5 million, increasing 6.4% year over year but below the Zacks Consensus Estimate of $4,337.5 million. (Read more: BCE Lags Q2 Earnings and Revenue Estimates, Reiterates View)

3. GAAP net income of Telephone and Data Systems in the reported quarter was $10 million or 9 cents per share compared with $28 million or 25 cents in the year-ago quarter. Quarterly earnings per share of 9 cents were well below the Zacks Consensus Estimate of 13 cents. Revenues were down 4% year over year to $1,247 million in the reported quarter, underperforming the Zacks Consensus Estimate of $1,266.5 million. (Read more: Telephone & Data Systems Q2 Earnings & Revenues Lag)

4. United States Cellular’s GAAP net income came in at $12 million or 14 cents per share compared with $27 million or 32 cents in the year-ago quarter. However, quarterly adjusted earnings per share of 17 cents were in line with the Zacks Consensus Estimate. Quarterly total revenue of $963 million was down 3% year over year outpacing the Zacks Consensus Estimate of $950.6 million. (Read more: United States Cellular Q2 Earnings In Line, Sales Top)

5. On a GAAP basis, quarterly net loss of Cincinnati Bell came in at $0.5 million or a loss of a penny per share against a net income of $75 million or $1.78 per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share were 7 cents, which missed the Zacks Consensus Estimate by a penny. Quarterly total revenue of $294 million declined 2% year over year beating the Zacks Consensus Estimate of $290 million. (Read more: Cincinnati Bell Q2 Earnings Lag Estimates, Sales Beat)

Price Performance

The following table shows the price movement of major telecom players over both the last week and last six months.

Company

Last Week

Last 6 Months

VZ

0.88%

-0.68%

T

0.13%

-1.75%

S

-7.83%

-7.01%

TMUS

-0.06%

4.76%

CHTR

4.81%

24.11%

TEF

0.53%

17.98%

AMX

-1.51%

35.81%

CMCSA

2.72%

7.33%

DISH

-5.59%

-3.57%

In the last five trading sessions, share price movement of major telecom stocks witnessed a mixed trend. Sprint (7.83%) and DISH Network (5.59%) lost significantly while Charter Communications gained remarkably (4.81%)in this time frame. Likewise, the price performances of most of the major telecom stocks were mixed in the last six months. Among the stocks that gained substantially are America Movil (35.81%), Charter Communications (24.11%) andTelefonica (17.98%).

What’s Next in the Telecom Space?

We do not foresee any significant changes in the telecom industry or overall global economic factors that can affect the industry in the coming week. Consequently, we expect stocks to trade in line with the broader market.

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