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U.S. telecom stocks went downhill over the past five trading days owing to the persistent uncertainty regarding the continued chip shortage and supply chain disruptions extending beyond semiconductors to basic structural components. These building blocks form a critical element in essential telecommunication equipment as well as in the broadband and cable industry. A dearth of raw material supply has affected production of nearly every element of the communications sector, ranging from infrastructure products such as routers, switches and base stations to the user terminal side such as laptops, desktops and mobile phones. This has severely affected the operations of relatively small network operators and rural carriers, while denting the profitability of their larger peers. To add to the woes, rising inflationary pressures have further increased production costs, adversely impacting sector margins. Although the government has employed certain administrative steps to tide over the storm, it is yet to yield broad-based results across the spectrum. This likely triggered the downtrend.
Meanwhile, in order to bridge the digital divide and provide better broadband access across the length and breadth of the country, the Biden administration has undertaken a new broadband mapping tool. Dubbed the "Indicators of Broadband Need", the tool amalgamates data from both public and private entities, and is much more comprehensive and granular compared to the erstwhile mapping data provided by telcos and ISPs that often provided a distorted figure. It offers a detailed view of individual homes and businesses and aims to plug the yawning access gaps for a complete picture of real broadband availability.
At the same time, the lawmakers are reportedly giving the final touches to nine tech and telecom bills to reduce America’s dependence on China-based hardware and address national security concerns over wireless networks from adverse foreign entities. These include legislation on cybersecurity policy and creation of a council to improve the security and reliability of U.S. communications networks. Two other bills on the list titled "TEAM TELECOM Act" and the "Secure Equipment Act of 2021" are aimed to strengthen the interagency review process and the approval guidelines to tackle national security concerns over FCC approval of communication products from foreign firms. Another bill titled the "Open RAN Outreach Act" is intended to make the NTIA responsible for imparting education and technical assistance to small communications providers for replacing gears from China-based firms like ZTE and Huawei.
Regarding company-specific news, portfolio enhancement, trials, collaboration and strategic deals primarily took center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Qualcomm Incorporated (QCOM - Free Report) has unveiled Snapdragon 888 Plus — an upgraded version of its flagship 5G Snapdragon mobile platform. The new SoC (System-on-Chip) is likely to offer a premium entertainment, connectivity and gaming experience with enhanced features, stirring the interest of several leading handset manufacturers across the globe.
With a plethora of unique features in its category, commercial handset makers like ASUS, Honor, Motorola, vivo, and Xiaomi have expressed their desire to incorporate Snapdragon 888 Plus in their upcoming smartphones by the second half of the year.
2. Ericsson (ERIC - Free Report) recently collaborated with Telstra Corporation Limited to achieve the milestone of the world’s longest distance 5G call from a commercial mobile site. The successful completion of a 5G Standalone (SA) data call across 113 km is likely to enable the Australia-based carrier to extend its coverage footprint in rural areas to better serve customers.
The 5G SA call was achieved using this commercial 5G SA network software on Telstra’s 850 MHz spectrum. The successful execution of the 5G data call will facilitate the network operator to overcome Australia’s geographical and demographical challenges and take the next big step in the evolution of the 5G ecosystem to make it more pervasive across the country.
3. Nokia Corporation (NOK - Free Report) has conducted a successful trial with Vodafone Turkey, an operating unit of Vodafone Group Plc, to test the efficacy of intercontinental connectivity with the first 1T (terabit) clear-channel IP interface. The trial is part of the network modernization initiative of Vodafone Turkey, as it aims to scale up operations to effectively handle exponential growth in data traffic.
The test was undertaken by using Nokia’s 7950 XRS (Extensible Routing System) routers with terabit interfaces powered by its FP4 chipset. Leveraging modular and extensible hardware design that ensures granular and economical scaling up to 96 Tb/s HD capacity in a standard 19” rack, 7950 XRS routers enable carriers to build a versatile, reliable and converged core network. It helps to address the entire range of core routing requirements on common hardware with a flexible, pay-as-you-go software licensing model.
4. AT&T Inc. (T - Free Report) recently announced the expansion of FirstNet network that will improve the wireless communications of first responders of Chester, SC. The company has added a purpose-built cell site, which will provide 4G LTE and HD voice service for enhanced coverage along highway 72 in Chester between Leeds and Eureka Mill. This new site will give first responders on FirstNet priority access to voice and data.
The network is being built under direct feedback from public safety officials. AT&T is using Band 14 and its commercial spectrum to extend the reach of FirstNet. The new infrastructure will also help improve the overall coverage for AT&T’s wireless customers in Chester County.
5. Leading satellite communications company, Iridium Communications Inc. (IRDM - Free Report) has announced that it has clinched a $30 million worth research and development contract from the U.S. Army to develop an experimental payload on the back of Iridium Burst technology. Iridium Burst is an avant-garde service that has been specifically designed to transfer data to multiple enabled devices from space.
Markedly, the payload will be hosted on small satellite (smallsat) constellation that facilitates navigation systems for the global positioning system (GPS) and GPS-denied precision systems. This will help in establishing a seamless sensor-to-soldier data transmission path, thereby aiding armed forces in the battlefield.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
Image Source: Zacks Investment Research
In the past five trading days, Qualcomm has been the best performer with its stock gaining 5.2%, while Arista declined the most with its stock falling 0.6%.
Over the past six months, Motorola has been the best performer with its stock appreciating 22.8%, while Bandwidth declined the most with its stock falling 14.9%.
Over the past six months, the Zacks Telecommunications Services industry has gained 11.4% while the S&P 500 has rallied 16.6%.
Image Source: Zacks Investment Research
What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will remain glued to how the administration implements key policy changes to safeguard the interests of the industry as it battles inflation and chip shortage.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Telecom Stock Roundup: Qualcomm Upgrades Chip, Ericsson's Longest 5G Call & More
U.S. telecom stocks went downhill over the past five trading days owing to the persistent uncertainty regarding the continued chip shortage and supply chain disruptions extending beyond semiconductors to basic structural components. These building blocks form a critical element in essential telecommunication equipment as well as in the broadband and cable industry. A dearth of raw material supply has affected production of nearly every element of the communications sector, ranging from infrastructure products such as routers, switches and base stations to the user terminal side such as laptops, desktops and mobile phones. This has severely affected the operations of relatively small network operators and rural carriers, while denting the profitability of their larger peers. To add to the woes, rising inflationary pressures have further increased production costs, adversely impacting sector margins. Although the government has employed certain administrative steps to tide over the storm, it is yet to yield broad-based results across the spectrum. This likely triggered the downtrend.
Meanwhile, in order to bridge the digital divide and provide better broadband access across the length and breadth of the country, the Biden administration has undertaken a new broadband mapping tool. Dubbed the "Indicators of Broadband Need", the tool amalgamates data from both public and private entities, and is much more comprehensive and granular compared to the erstwhile mapping data provided by telcos and ISPs that often provided a distorted figure. It offers a detailed view of individual homes and businesses and aims to plug the yawning access gaps for a complete picture of real broadband availability.
At the same time, the lawmakers are reportedly giving the final touches to nine tech and telecom bills to reduce America’s dependence on China-based hardware and address national security concerns over wireless networks from adverse foreign entities. These include legislation on cybersecurity policy and creation of a council to improve the security and reliability of U.S. communications networks. Two other bills on the list titled "TEAM TELECOM Act" and the "Secure Equipment Act of 2021" are aimed to strengthen the interagency review process and the approval guidelines to tackle national security concerns over FCC approval of communication products from foreign firms. Another bill titled the "Open RAN Outreach Act" is intended to make the NTIA responsible for imparting education and technical assistance to small communications providers for replacing gears from China-based firms like ZTE and Huawei.
Regarding company-specific news, portfolio enhancement, trials, collaboration and strategic deals primarily took center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Qualcomm Incorporated (QCOM - Free Report) has unveiled Snapdragon 888 Plus — an upgraded version of its flagship 5G Snapdragon mobile platform. The new SoC (System-on-Chip) is likely to offer a premium entertainment, connectivity and gaming experience with enhanced features, stirring the interest of several leading handset manufacturers across the globe.
With a plethora of unique features in its category, commercial handset makers like ASUS, Honor, Motorola, vivo, and Xiaomi have expressed their desire to incorporate Snapdragon 888 Plus in their upcoming smartphones by the second half of the year.
2. Ericsson (ERIC - Free Report) recently collaborated with Telstra Corporation Limited to achieve the milestone of the world’s longest distance 5G call from a commercial mobile site. The successful completion of a 5G Standalone (SA) data call across 113 km is likely to enable the Australia-based carrier to extend its coverage footprint in rural areas to better serve customers.
The 5G SA call was achieved using this commercial 5G SA network software on Telstra’s 850 MHz spectrum. The successful execution of the 5G data call will facilitate the network operator to overcome Australia’s geographical and demographical challenges and take the next big step in the evolution of the 5G ecosystem to make it more pervasive across the country.
3. Nokia Corporation (NOK - Free Report) has conducted a successful trial with Vodafone Turkey, an operating unit of Vodafone Group Plc, to test the efficacy of intercontinental connectivity with the first 1T (terabit) clear-channel IP interface. The trial is part of the network modernization initiative of Vodafone Turkey, as it aims to scale up operations to effectively handle exponential growth in data traffic.
The test was undertaken by using Nokia’s 7950 XRS (Extensible Routing System) routers with terabit interfaces powered by its FP4 chipset. Leveraging modular and extensible hardware design that ensures granular and economical scaling up to 96 Tb/s HD capacity in a standard 19” rack, 7950 XRS routers enable carriers to build a versatile, reliable and converged core network. It helps to address the entire range of core routing requirements on common hardware with a flexible, pay-as-you-go software licensing model.
4. AT&T Inc. (T - Free Report) recently announced the expansion of FirstNet network that will improve the wireless communications of first responders of Chester, SC. The company has added a purpose-built cell site, which will provide 4G LTE and HD voice service for enhanced coverage along highway 72 in Chester between Leeds and Eureka Mill. This new site will give first responders on FirstNet priority access to voice and data.
The network is being built under direct feedback from public safety officials. AT&T is using Band 14 and its commercial spectrum to extend the reach of FirstNet. The new infrastructure will also help improve the overall coverage for AT&T’s wireless customers in Chester County.
5. Leading satellite communications company, Iridium Communications Inc. (IRDM - Free Report) has announced that it has clinched a $30 million worth research and development contract from the U.S. Army to develop an experimental payload on the back of Iridium Burst technology. Iridium Burst is an avant-garde service that has been specifically designed to transfer data to multiple enabled devices from space.
Markedly, the payload will be hosted on small satellite (smallsat) constellation that facilitates navigation systems for the global positioning system (GPS) and GPS-denied precision systems. This will help in establishing a seamless sensor-to-soldier data transmission path, thereby aiding armed forces in the battlefield.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, Qualcomm has been the best performer with its stock gaining 5.2%, while Arista declined the most with its stock falling 0.6%.
Over the past six months, Motorola has been the best performer with its stock appreciating 22.8%, while Bandwidth declined the most with its stock falling 14.9%.
Over the past six months, the Zacks Telecommunications Services industry has gained 11.4% while the S&P 500 has rallied 16.6%.
What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will remain glued to how the administration implements key policy changes to safeguard the interests of the industry as it battles inflation and chip shortage.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>