Telecom Stock Roundup: Telus and Liberty Global Q4 Results Disappoint, Crown Castle to Vend CCAL - Analyst Blog

Last week, the telecom sector did not witness any notable events. With respect to fourth-quarter results, Canadian telecom operator Telus Corp. (TU) and European cable TV behemoth Liberty Global Plc. (LBTYA) reported disappointing financial results. On the other hand, Taiwanese telecom giant Chunghwa Telecom Co. Ltd. (CHT) and French telecom MNC (multinational corporate) Orange (ORAN) posted mixed earnings results for the same quarter.

Meanwhile, Crown Castle International Corp. (CCI), the largest provider of shared wireless infrastructure in the U.S., is considering several options to sell its stake in Australian subsidiary - CCAL. Notably, CCAL is the largest wireless tower operator in Australia with a portfolio comprising 1,800 sites across the nation.

Recap of the Week’s Most Important Stories

1.    Crown Castle is considering selling its stake in CCAL. The company owns a 77.6% stake in CCAL and an inter company loan of approximately $248 (AS$306) million due from CCAL as of Dec 31, 2014. Crown Castle currently operates in 100 of the top U.S. markets with a portfolio of over 40,000 towers and 14,000 small cell nodes supported by around 7,000 miles of fiber backhaul.

Notably, the U.S. telecom behemoths like Verizon Communications Inc. (VZ), AT&T Inc. (T) and T-Mobile US Inc. (TMUS) are its major customers. In 2014, Crown Castle’s site rental revenues and adjusted EBITDA rose 22% and 19%, respectively from the year-ago quarter.  (Read More: Crown Castle Mulls Vending Australian Subsidiary.)

2.    Chunghwa declared mixed financial results for the fourth quarter of 2014. Quarterly total revenue came in at approximately $1,888 million, up 1.4% year over year. The fourth-quarter 2014 net income came in at around $258 million, down 12.6% year over year.  Net earnings per ADR (American Depositary Receipt) were 36 cents as against 40 cents in the year-ago quarter.

Quarterly operating income stood at $301 million, down 16.1% year over year. Quarterly operating costs were $1,628.5 million, up 6.7% year over year. Operating margin was 15.8% compared with 19.1% in the year-ago quarter. (Read More: Chunghwa Q4 Earnings Deteriorate Y/Y, Revenues Grow.)

3.    Liberty Global declared disappointing financial results in the fourth quarter of 2014. Notably, in the fourth quarter, Liberty Global added 351,000 organic revenue generating units (RGU), down 15% year over year. Quarterly GAAP net loss came in at $523.4 million or 62 cents per share compared with $121.2 million or a loss of 16 cent per share in the prior-year quarter.

However, adjusted net loss per share of 17 cents was in sharp contrast to the Zacks Consensus Estimate of net income of 12 cents per share. Meanwhile, quarterly total revenue of $4,615.2 million was up 3.3% year-over-year but lagged the Zacks Consensus Estimate of $4,748 million. (Read More: Liberty Global Incurs Loss in Q4, Revenues Lag.)

4.    Telus reported dismal fourth-quarter 2014 numbers with both the top line and the bottom line missing the Zacks Consensus Estimate. The company reported fourth-quarter adjusted earnings of 53 Canadian cents per share (42 cents per ADR), up 8.2% year over year but well below the Zacks Consensus Estimate of 48 cents. Total revenue came in at approximately $2,481 million, up 6.1% year over year. However, the figure missed the consensus mark of $2,581 million.

Adjusted EBITDA was $903.9 million, up 4.4% year over year. Quarterly adjusted EBITDA margin stood at 32.8% as against 33.4% in the prior-year quarter. (Read More: Telus Misses Q4 Earnings & Revenues, Offers 2015 Outlook.)

5.    Vonage Holdings Corp. (VG) reported robust financial results for the fourth quarter of 2014. Quarterly net income came in at $5.6 million or 3 cents per share compared with $3.6 million or 2 cents per share in the year-ago quarter. Moreover, fourth-quarter adjusted earnings per share of 9 cents comfortably outpaced the Zacks Consensus Estimate of 4 cents.Total revenue in the quarter was $214.6 million, up 1.6% year over year and slightly above the Zacks Consensus Estimate of $214 million.

Operating income stood at $13.8 million, reflecting a significant rise of 108.4% year over year. Adjusted EBITDA was $34.8 million, up 38.3% year over year. (Read More: Vonage Holdings Tops Q4 Earnings and Revenue Estimates.)

Price Performance

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

Company

Last Week

Last 6 Months

VZ

-1.15%

+2.64%

T

-1.03%

+2.28%

S

+1.22%

-11.39%

TMUS

-1.00%

+7.49%

VOD

-1.11%

+5.93%

CHL

+2.05%

+11.81%

AMX

+2.14%

-6.71%

CMCSA

+1.41%

+7.24%

DISH

-0.84%

+17.30%

Over the last five trading sessions, the share price movement of most of the major telecom stocks was mixed. America Movilgained the maximum value whereas Verizon lost the most. Meanwhile, over the last six months, the price performance of key telecom stocks was predominantly positive. DISH and China Mobile gained a considerable 17.30% and 11.81% respectively. Conversely, Sprint lost 11.39% over the same time frame.

What’s Next in the Telecom Sector?

We expect the upcoming week to be a busy one for this sector as several telecom, cable TV and satellite TV operators will release their earnings results. Telecom operators such as T-Mobile US, Telephone and Data Systems, United Sates Cellular, Windstream Holdings and Telefonica, along with cable TV giants Comcast and Cablevision Systems, and satellite TV duo DIRECTV and DISH Network are scheduled to release their quarterly financial results.

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AT&T INC (T): Free Stock Analysis Report
 
TELUS CORP (TU): Free Stock Analysis Report
 
CROWN CASTLE (CCI): Free Stock Analysis Report
 
LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report
 
CHUNGHWA TELECM (CHT): Free Stock Analysis Report
 
VERIZON COMM (VZ): Free Stock Analysis Report
 
ORANGE-ADR (ORAN): Free Stock Analysis Report
 
T-MOBILE US INC (TMUS): Free Stock Analysis Report
 
VONAGE HOLDINGS (VG): Free Stock Analysis Report
 
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