Last week, the telecom sector did not witness any notable event. Nevertheless, some of them are worth mentioning.

According to recent reports by The New York Post, the U.S. telecom behemoth Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) is planning to acquire The Walt Disney Co. (DIS Quick QuoteDIS - Free Report) , a leading media and entertainment giant. However, neither of the companies confirmed the news. Mergers between telecom or cable TV operators and media giants have become crucial as both sectors are aggressively delivering content on online digital platform.

In a separate development, leading cable multi-service operator (MSO), Charter Communications Inc. (CHTR Quick QuoteCHTR - Free Report) recently got embroiled in a dispute with Verizon. Charter Communications had filed a complaint with the New York State Public Service Commission stating that Verizon was slow in responding to its requests to access and work on the utility poles of the telecom operator.

Meanwhile, CenturyLink Inc. recently unveiled the long-awaited over the top (OTT) TV service – beta version of the Virtual Multichannel Video Programming Distributor service (V-MVPD). Notably, V-MVPD offers a broad range of premium video content over the Internet without having to own any network infrastructure like other cable MSO or video service providers. CenturyLink Stream will become a nationally distributed virtual MVPD service. CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

American Tower Corp. (AMT Quick QuoteAMT - Free Report) , a leading wireless tower operator and real investment trust, is significantly expanding international operations. According to CEO Jim Taiclet, the company’s total revenue from international business is likely to outperform the U.S. revenues in the next three to seven years.

Moreover, American Tower’s closest rival, Crown Castle International Corp. (CCI Quick QuoteCCI - Free Report) has decided to double existing small-cell network within the next two years. According to a report by Guggenheim Equity Research, the company will spend around $1.2 billion to deploy 25,000 new small-cell nodes over the next 18-24 months.

In the pay-TV front, major U.S. Pay-TV operators are currently exploring ways to boost video revenues by increasing presence in hospitality segment.  AT&T Inc. (T Quick QuoteT - Free Report) and DISH Network Corp. has unveiled a set of services allowing guests to stream videos over the hotel TV set. The emergence of Pay-TV operators to provide in-room streaming services reflects the downward trend for in-room pay per view service.

Read the last Telecom Stock Roundup for Jun 29, 2017.

Recap of the Week’s Most Important Stories

1.    Verizon is the largest telecom operator with a nationwide presence in both the wireless and wireline front. In Oct 2015, the company launched its mobile video service go90 targeting the younger generation. On the other hand, Disney has presence in film studios with a strong foothold in animation films, TV broadcasting operations with brand names like ESPN and theme park businesses. If Verizon finally decides to takeover Disney, we believe the combined entity will become a major player in the consolidated telecom-media space. (Read more: Is Verizon Communications Eyeing Disney Takeover?)

2.    CenturyLink’s $45 per month OTT TV service offers a cloud DVR that can store up to 50 hours of HD programming. It also features a broad mix of add-on programming packages. The company has announced plans to offer a seven-day free trial for its new OTT service and a discount of $5 to CenturyLink broadband subscribers. With a “Sports Extra” package of $10-a-month additional sports channels like Outside Television and beIN Sports can be added to the customer’s existing plan.  (Read more: CenturyLink Introduces Beta Version of OTT TV Service)

3.    At present, American Tower operates approximately 150,000 antenna properties worldwide, of which, the U.S. accounts for only a little over 40,000 cell sites. However, in 2016, 59% of the company’s total revenue came from this region while international operations together accounted for the remaining 41%. American Tower has a strong presence in Latin America, Asia and Australia. The company operates around 58,000 cell sites in India alone. Management expects India to contribute around 10% of total revenue by 2018.  (Read more: American Tower Continues to Strengthen Global Operations)

4.    Crown Castle has about 40,000 towers and 29,000 route miles of fiber supporting small cells. Recently, it acquired privately held Wilcon Holdings LLC., a premier service provider of dark fiber, which will augment the wireless tower operator’s small-cell backhaul. Management is gradually developing small-cell networks to supplement the macro site tower business. After the Wilcon acquisition, Crown Castle will attain ownership rights of over 28,000 route miles of fiber. (Read more: Crown Castle Planning to Expand Small-Cell Operations)

5.    Charter Communications’ ability to complete its network expansion plan largely depends on its ability to access poles owned by third parties. The third parties’ timely approval is further based on the success of their contractual and regulatory obligations. Similar to other cable providers, Charter Communications works with multiple pole owners but has been particularly facing problems with Verizon. However, Verizon claims to have been cooperative to Charter Communications speed up its construction efforts. (Read more: Charter Blames Verizon for Network Expansion Delay)

Price Performance

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

In the last five trading sessions, share price movement of most of major telecom stocks witnessed a mixed trend. None of the stocks saw any significant movement. However, in the last six months, the price performances of most of the major telecom stocks were positive. Among the stocks that gained substantially are America Movil (27.71%), Charter Communications (13.11%) and Comcast (10.21%). In contrast, Verizon lost 14.23%.

What’s Next in the Telecom Space?

We do not foresee any significant changes in the telecom industry or overall global economic factors that can affect the industry in the coming week. Consequently, we expect stocks to trade in line with the broader market.

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