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Telecom Stock Roundup: T-Mobile’s Freed Spectrum, AT&T’s Buyout & More


In the last five trading days, telecom stocks witnessed a sharp rise initially and maintained a flat trajectory thereafter as the Trump administration imposed tariffs on $34 billion worth of imported goods against China. The stocks resumed its ascent later in the week but slipped partially yesterday, as Washington issued a fresh threat to impose additional tariffs against the communist nation.

At the stroke of midnight last Friday, the United States implemented its long- publicized trade tariffs against China, prompting a swift retaliation of the same magnitude by the latter. As the battle lines were drawn and shots fired from both sides, the U.S. equity markets remained more or less unfazed by the events and seemingly waited for one of the warring nations to blink first to avert any catastrophic damage. However, after Trump issued threats to impose an additional tariff on $200 billion of goods from China, equity markets became shaky and lost resilience.

Amid this cacophony, the U.S. Commerce Department offered a window of opportunity for the initiation of trade-related negotiations with China, as it inked an escrow agreement with ZTE to move it closer to resuming its business activities. This would allow China’s second biggest telecommunications equipment manufacturer to start its normal production schedule with access to U.S. suppliers. The seven-year ban imposed on the beleaguered telecom firm in April would be revoked, post its deposit of $400 million in the escrow account.

Regarding company-specific news, technology collaborations, acquisitions and new investments for network expansion ruled the roost over the last five trading days.

Recap of the Week’s Most Important Stories

1. Nokia Corporation NOK inked an agreement with China Mobile Limited to carry out joint research to explore the potential of artificial intelligence (AI) and machine learning in 5G networks in China.

By collaborating with Nokia, China Mobile seeks to establish a laboratory in Hangzhou, China, to develop a demo system that will evaluate the feasibility of newer applications within 5G ecosystem and leverage AI and machine learning capabilities by working in tandem with third parties. This will help both the companies to successfully address the booming market of the digital economy. (Read more: Nokia-China Mobile Partner for AI Research in 5G Networks)

2. T-Mobile US, Inc. TMUS has augmented its LTE coverage in New York City area by enabling CBS Corporation owned WLNY-TV to repack 600 MHz spectrum per the FCC mandate to clear spectrum for wireless providers.

The freed-up spectrum will facilitate T-Mobile to better serve its customers in the region with 5G-enabled products and services. T-Mobile plans to use its 600 MHz spectrum holdings to deploy America’s first nationwide 5G network by 2020. (Read more: T-Mobile Boosts LTE Coverage in New York With Freed Spectrum)

3. Ericsson ERIC has been selected by Italian telecom firm Wind Tre to modernize the latter’s Radio Access Network across the country.

Per the deal, Ericsson will implement the Ericsson Radio System (ERS) product portfolio into the Italian communications service provider's network, starting October 2018. It includes new ERS Radios and ERS Basebands to enhance network quality and user experience for Wind Tre’s 31 million customers. (Read more: Ericsson to Transform Wind Tre's Network Experience in Italy)

4. Juniper Networks, Inc. JNPR announced that ESDS has successfully implemented its high-performing networking solutions to enhance cloud application delivery for greater speed and scalability. ESDS is an India-based managed data center service and auto-scalable cloud solution provider.

Juniper will power ESDS with cloud transformation as it creates a secure, scalable and automated multicloud environment for its customers. The company is simplifying the journey for customers toward a secure and automated multicloud. (Read more: Juniper Provides Improved Cloud Application Delivery to ESDS)

5. AT&T Communications, part of AT&T Inc. T, announced that it plans to acquire AlienVault to augment its line of cybersecurity products designed for small and medium-sized businesses. AlienVault is a privately held computer security firm based in San Mateo, CA.

The buyout will synergize AlienVault's expertise with AT&T's cybersecurity solutions portfolio that includes threat detection and prevention as well as response technologies and services. After the acquisition closes, AT&T business customers will be able to access the unified security management platform that helps make organizations more effective at threat detection and response. (Read more: AT&T Unit to Buy AlienVault to Boost Cybersecurity Portfolio)

Price Performance

The following table shows the price movement of some of the major telecom stocks over the past week and during the last six months.

In the last five trading days, Motorola Solutions, Inc. MSI was the major gainer with its share price increasing 3.7%. AT&T was the major decliner with its stock losing 2.6%.

Over the last six months, Motorola was the best performer with its stock appreciating 19.7% while AT&T declined the most with its shares falling 15.8%.

Over the last six months, the Zacks Telecommunications Services industry has underperformed the benchmark S&P 500 Index with an average fall of 7.7% compared with a decline of 0.2% for the latter.

What’s Next in the Telecom Space?

In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to how the tariff war reshapes the global trade equilibrium as the earnings season commences.

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