Zacks Industry Outlook Highlights: Comcast, Charter, DISH, Sprint and Altice

For Immediate Release

Chicago, IL – March 22, 2018 – Today, Zacks Equity Research discusses the Telecom, including Comcast Corp. CMCSA, Charter Communications Inc. CHTR, DISH Network Corp. DISH, Sprint Corp. S and Altice USA Inc. ATUS.

Industry: Telecom, Part 3

Link:    https://www.zacks.com/commentary/154569/us-telecom-intra-industry-competition-a-major-concern

T he U.S. telecom market continues to witness intense pricing competition, as success to a great extent depends on technical superiority, quality of services and scalability.  Additionally, the U.S. wireless industry is likely to become even more competitive in 2018 with the entry of cable MSOs (multi-service operators) in this space.

Entry of New Players in the Wireless Space

Comcast Corp.has already forayed into this field with its Xfinity Mobile offering. Presently, the company is utilizing its MVNO (mobile virtual network operator) agreement with Verizon to use the latter’s wireless network along with its own WiFi network to offer mobile services. Importantly, the company acquired 73 licenses in the band of 600 MHz auctioned by the FCC. We believe that in the future Comcast will deploy this spectrum for extensive wireless coverage.

Charter Communications Inc.has reiterated its plans of launching wireless service in the first half of next year. Much like Comcast, the company too has an MVNO agreement with Verizon as well as its own WiFi network to offer mobile services.

The company has also launched experimental field trials of the 5G wireless network. These trials come on the back of spectrum test licenses granted to it by the FCC. The company is actively testing licensed small-cell technologies and has petitioned the FCC to release 3.5 GHz spectrum, popularly known as the CBRS band, for both licensed and unlicensed use.

DISH Network Corp.has created an extensive portfolio of spectrum, the most important component of wireless networks. The company boasts a portfolio of 80 MHz of radio frequencies of different bands which will be utilized to deploy 4G LTE wireless network in top 100 U.S. markets. DISH Network’s CEO Charlie Ergen has hinted that the company is interested in the potential deal-making to enter the wireless industry. At the same time, Ergen also stated that the company has a clear plan of building a wireless network on its own.

Additionally, Sprint Corp. has entered into a new multi-year strategic agreement with Altice USA Inc. Per the terms of the agreement, Altice USA will utilize Sprint’s network to provide mobile voice and data services to customers throughout the country, and Sprint will leverage the Altice USA broadband platform to accelerate the densification of its network.

Comcast, Charter Communications and Sprint currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Will Geographical Expansion Stop?

Cutting across barriers has become a fairly common practice for telecom players. The objective is to offer better service and customer convenience. However, President Trump has already threatened to terminate the previous Obama administration's efforts to normalize US-Cuba relations. All four leading U.S, wireless operators -- AT&T, Sprint, Verizon and T-Mobile US -- have established business links with Cuba's Empresa de Telecomunicaciones de Cuba SA (ETECSA).

Moreover, Trump may deal a major blow to Mexico as he believes that Mexico is to blame for the lack of jobs for Americans. At present, NAFTA is at turmoil. AT&T has strong business interest in Mexico.

Weaknesses

In general, the beleaguered telecommunications companies have high debt levels and large financial leverage ratios. Moreover, they are often unable to cope with recent market trends. Other risks that pose threats are as follows:

    •    Potential Business Slowdown: Sales fluctuations of carriers are expected to continue weighing on capital-spending decisions -- a major problem faced by equipment vendors. The companies are expected to retain focus on improving balance sheets, financial discipline and free cash-flow generation.

     •    Product Overlapping: We may see more product-sharing deals between telecom, cable TV and satellite TV operators, as each of these players are vying to grab a sizeable share in each other’s territory. Even pay-TV services, offerings to business enterprises, mobile backhaul and metro-Ethernet segments may observe more convergence. Mobile phone makers are now progressively offering tablets and chipset manufacturers are providing chips for personal computers as well as mobile devices, thus frequently interchanging their areas of operations.

    •    Intensified Competition: Technological upgrades and breakthroughs have resulted in cutthroat price competition. Product life-cycle and upgrade-cycle have been reduced drastically as several firms are coming up with new products and services within a short span of time. Increasing competition is compelling players to offer heterogeneous and bundled services to retain position in the space. 

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Sprint Corporation (S) : Free Stock Analysis Report
 
DISH Network Corporation (DISH) : Free Stock Analysis Report
 
Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
 
Altice USA, Inc. (ATUS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research