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T-Mobile US' Layer3 TV Buyout to Speed Up OTT Service Launch
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T-Mobile US Inc. (TMUS - Free Report) recently completed the acquisition of Layer3 TV. The buyout is likely to help T-Mobile US proceed with the launch of TV streaming services in 2018.
With this announcement, shares of T-Mobile US inched up 0.92% to $64.53 on Jan 23.
The acquisition was announced on Dec 13, 2017. Based in Denver, CO, Layer3 TV is a cable company operating in Chicago, Washington DC, and Los Angeles. It combines TV, streaming online video content and social media content under one platform. Moreover, the company runs its own private IP network to serve and manage content directly, without bandwidth throttling. Layer3 TV can also transmit HD video at a bandwidth of less than 4 megabits per second.
More than 200 Layer3 TV employees and its executive personnel will work under T-Mobile US’ new television team, led by Layer3 TV's CEO Jeff Binder. Moreover, Binder has joined T-Mobile US as an Executive Vice President and part of the Senior Leadership Team.
While plans for the TV streaming service are on track, the existing Layer3 TV product will be available for demonstration or purchase in select T-Mobile US stores in Chicago, Dallas, Denver, Los Angeles and Washington, DC in the coming weeks.
Will the Buyout Impact 2017 Guidance?
T-Mobile US expects the 2017 guidance to be intact post the acquisition. On Jan 1, 2018, the company revealed its preliminary subscriber statistics for 2017. The company reported an addition of 5.7 million net customers in 2017, which includes 3.6 million customers in the lucrative postpaid segment. Notably, postpaid customers are billed monthly and considered more profitable for telecom operators. Of the 3.6 million net additions, 2.8 million were postpaid phones and 0.8 million were for connected devices like tablets.
T-Mobile US exited 2017 with a total of 72.6 million customers. It was also the fourth consecutive year wherein the company added more than 5 million subscribers. In the fourth quarter of 2017, the company gained 1.9 net million postpaid customers, marking the 19th straight quarter of more than 1 million net subscriber additions. Customer churn, in fourth-quarter 2017, was 1.18%, indicating an improvement of 10 basis points (bps) year over year and 5 bps sequentially. (Read more in: Will T-Mobile US Continue its Bull Run in 2018?)
Similar OTT Launces
The wireless industry is presently hyped with the deployment and launch of the next-generation 5G networks. In such a scenario, T-Mobile US is striving to strengthen foothold in the saturated U.S. pay-TV industry.
T-Mobile will leverage LTE network speeds and Layer3 TV’s technology to roll out TV streaming service. Notably, offering of such services has become a popular trend in the industry.
Internet-TV streaming service is gaining market traction gradually in the United States. Recently, the legacy pay-TV industry has been facing stiff competition from online video streaming service providers such as Netflix, Hulu.com, YouTube etc, thanks to cheap source of TV programming. The low-cost over-the-top (OTT) video streaming service has resulted in massive cord cutting, which is currently threatening the pay-TV business model. Video offering, which represents the core business function of cable-TV operators, is losing popularity.
As a result, Internet TV streaming emerged as a strong alternative to counter this competitive threat.
Verizon Communications is reportedly planning to launch a theme-based online streaming TV service in 2018. The telecom service provider will offer channels based on themes like news, sports and entertainment. All these channels will be offered as a standalone application. (Read more in: Will Verizon Gain From Theme-Based TV Streaming Service?)
Major pay-TV operators such as AT&T Inc. (T - Free Report) , DISH Network Corp. and Sony Corp. have already launched Internet-TV streaming services. AT&T’s DirecTV Now includes channels like E!, FX, TBS and TNT. DISH Network’s Sling TV offers channels like ESPN, AMC, Cartoon Network, HBO and Univision. Sony’s PlayStation Vue provides a portfolio of channels like Bravo, Fox News, Nickelodeon and USA.
T-Mobile US portrays an impressive price performance. Over the past year, the stock has rallied 6.2% against the industry’s decline of 6.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
T-Mobile US' Layer3 TV Buyout to Speed Up OTT Service Launch
T-Mobile US Inc. (TMUS - Free Report) recently completed the acquisition of Layer3 TV. The buyout is likely to help T-Mobile US proceed with the launch of TV streaming services in 2018.
With this announcement, shares of T-Mobile US inched up 0.92% to $64.53 on Jan 23.
The acquisition was announced on Dec 13, 2017. Based in Denver, CO, Layer3 TV is a cable company operating in Chicago, Washington DC, and Los Angeles. It combines TV, streaming online video content and social media content under one platform. Moreover, the company runs its own private IP network to serve and manage content directly, without bandwidth throttling. Layer3 TV can also transmit HD video at a bandwidth of less than 4 megabits per second.
More than 200 Layer3 TV employees and its executive personnel will work under T-Mobile US’ new television team, led by Layer3 TV's CEO Jeff Binder. Moreover, Binder has joined T-Mobile US as an Executive Vice President and part of the Senior Leadership Team.
While plans for the TV streaming service are on track, the existing Layer3 TV product will be available for demonstration or purchase in select T-Mobile US stores in Chicago, Dallas, Denver, Los Angeles and Washington, DC in the coming weeks.
Will the Buyout Impact 2017 Guidance?
T-Mobile US expects the 2017 guidance to be intact post the acquisition. On Jan 1, 2018, the company revealed its preliminary subscriber statistics for 2017. The company reported an addition of 5.7 million net customers in 2017, which includes 3.6 million customers in the lucrative postpaid segment. Notably, postpaid customers are billed monthly and considered more profitable for telecom operators. Of the 3.6 million net additions, 2.8 million were postpaid phones and 0.8 million were for connected devices like tablets.
T-Mobile US exited 2017 with a total of 72.6 million customers. It was also the fourth consecutive year wherein the company added more than 5 million subscribers. In the fourth quarter of 2017, the company gained 1.9 net million postpaid customers, marking the 19th straight quarter of more than 1 million net subscriber additions. Customer churn, in fourth-quarter 2017, was 1.18%, indicating an improvement of 10 basis points (bps) year over year and 5 bps sequentially. (Read more in: Will T-Mobile US Continue its Bull Run in 2018?)
Similar OTT Launces
The wireless industry is presently hyped with the deployment and launch of the next-generation 5G networks. In such a scenario, T-Mobile US is striving to strengthen foothold in the saturated U.S. pay-TV industry.
T-Mobile will leverage LTE network speeds and Layer3 TV’s technology to roll out TV streaming service. Notably, offering of such services has become a popular trend in the industry.
Internet-TV streaming service is gaining market traction gradually in the United States. Recently, the legacy pay-TV industry has been facing stiff competition from online video streaming service providers such as Netflix, Hulu.com, YouTube etc, thanks to cheap source of TV programming. The low-cost over-the-top (OTT) video streaming service has resulted in massive cord cutting, which is currently threatening the pay-TV business model. Video offering, which represents the core business function of cable-TV operators, is losing popularity.
As a result, Internet TV streaming emerged as a strong alternative to counter this competitive threat.
Verizon Communications is reportedly planning to launch a theme-based online streaming TV service in 2018. The telecom service provider will offer channels based on themes like news, sports and entertainment. All these channels will be offered as a standalone application. (Read more in: Will Verizon Gain From Theme-Based TV Streaming Service?)
Major pay-TV operators such as AT&T Inc. (T - Free Report) , DISH Network Corp. and Sony Corp. have already launched Internet-TV streaming services. AT&T’s DirecTV Now includes channels like E!, FX, TBS and TNT. DISH Network’s Sling TV offers channels like ESPN, AMC, Cartoon Network, HBO and Univision. Sony’s PlayStation Vue provides a portfolio of channels like Bravo, Fox News, Nickelodeon and USA.
Zacks Rank & Price Performance
T-Mobile US carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
T-Mobile US portrays an impressive price performance. Over the past year, the stock has rallied 6.2% against the industry’s decline of 6.6%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>