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TDS Completes OneNeck Sale: Will it be Beneficial for the Stock?

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Telephone and Data Systems, Inc. (TDS - Free Report) recently completed the divestiture of its subsidiaries, OneNeck IT Solutions LLC and OneNeck Data Center Holdings LLC (OneNeck), to US Signal Company, LLC. 

Being a wholly owned part of TDS since 2011, OneNeck specializes in providing secure hybrid IT and multi-cloud solutions through data centers in six Western and Midwestern states in the United States. The divestiture is in line with TDS' capital allocation strategy and is poised to provide additional capital to support the company’s fiber initiative, thereby enhancing network infrastructure across various U.S. communities.

TDS’ Focus on Fiber Networks

Headquartered in Chicago, IL, TDS is a diversified telecom service provider offering wireless and wireline services in the United States. It is steadily advancing its network infrastructure, with a strong emphasis on mid-band deployment to enhance speed and capacity. The geographical diversity and well-balanced presence across various major carriers underscore the robustness of its tower rental portfolio. 

The company is aggressively pushing to extend its fiber networks across its total service addresses. Currently, 49% of the company’s total service addresses are served by fiber, and it is on track to achieve its long-term goal of 60%. It aims to bring more fiber for better services in its current footprint and adjacent areas and is making steady investments to strengthen its fiber-based broadband networks. Such strategic moves underscore the company’s efforts to diversify its business from a telecom service provider to a fiber network provider. 

In the last reported quarter, TDS delivered 27,000 new marketable fiber addresses and is set to reach 125,000 fiber service addresses in 2024.

Will TDS Stock Benefit From the Divestiture?

The transaction marks a big consolidation in the telecom industry, as companies aims to reorganize their portfolios and align with shifting market conditions and technical changes. The transaction is expected to bolster TDS’ primary concentration on service with expanded technical support for customers.

TDS’s Stock Price Performance

Shares of TDS have gained 15.1% over the past year against the industry’s decline of 1.1%.

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TDS’ Zacks Rank and Key Picks

TDS currently carries a Zacks Rank #3 (Hold). 

Some better-ranked stocks in the broader industry have been discussed below.

Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy) at present, sells products to a prestigious list of clients, including global Fortune 500 companies in sectors such as cloud giants, enterprises, financial institutions and specialized cloud service providers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, Arista delivered an earnings surprise of 8.25%.

Harmonic Inc. (HLIT - Free Report) enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. It delivered a trailing four-quarter average earnings surprise of 32.5%. It currently sports a Zacks Rank of 1.

Airgain, Inc. (AIRG - Free Report) currently carries a Zacks Rank #2. It has a long-term earnings growth expectation of 35%.

Based in San Diego, CA, Airgain provides antenna products as integrated wireless solutions. These devices are designed to address vital connectivity requirements during product development and throughout the entire lifecycle of other industries, such as automotive and consumer, in addition to various sectors within an enterprise.

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