Telecom Stock Roundup: QCOM Invests in India, ERIC Boosts Airport Network & More

The U.S. telecom stocks witnessed a topsy-turvy pattern in the past week as geopolitical tensions triggered intense sector volatility. The Sino-American technology warfare seemed to force the industry to get polarized into two distinct halves, bringing an element of uncertainty within the rank and files of the telecom sector. However, this apparently did not deter the Trump administration to continue its relentless pursuit to safeguard national interests as it vowed to protect American data from being siphoned off through unlawful access. The government continued with its confidence-building administrative efforts to set guardrails and legislations to lend support to domestic telecommunication companies and protect sovereign interests.  

The White House is reportedly inching closer to seek a ban on TikTok, WeChat and other Chinese apps that are allegedly being used as cyber espionage tools to gain access to sensitive American data. Although no definite timeline has yet been set, it appears that it is only a matter of time that the ban is officially implemented. The estranged relationship between the United States and China was further strained as Washington refuted Beijing’s claims to offshore resources in the South China Sea. This marked a dramatic shift in policy by the Trump administration that hitherto refrained from taking any sides in territorial disputes in the region. This, in turn, evoked a sharp response from the communist nation and could potentially lead to a flare-up with widespread ramifications.

Amid a deepening row over the passage of a controversial security law in Hong Kong by the communist nation, President Trump signed an order to end the preferential trade agreement with the hitherto autonomous country. This implied that Hong Kong would be treated by the U.S. government as an extension of mainland China and would, therefore, cease to enjoy special economic privileges and export of sensitive technologies. This, in turn, might force several firms to redraw their supply-chain mechanism and re-evaluate their operations in the region.

The President also signed the Hong Kong Autonomy Act, which empowered officials to take administrative measures against individuals responsible for human rights violations. Notably, the government has already imposed visa restrictions against some Huawei employees accused of similar violations and is reportedly mulling travel restrictions on several Chinese Communist party members.  

In another significant development, the U.K. government has banned the usage of Huawei equipment from its high-speed wireless network on grounds of national security risks. Markedly, the government prohibited the purchase of new 5G equipment after December, while making it mandatory to eliminate the existing gear already installed by 2027. Other European countries are likely to follow suit with France, Italy, Germany and the Netherlands, closely monitoring the developments as more countries appear to recognize the threat of data piracy. With the tide slowly turning against Huawei and China-based apps, the telecom sector is likely to see a bumpy road ahead.

Regarding company-specific news, strategic investments, modernization drives, business collaborations and product launches primarily took the center stage over the past five trading days.

Recap of the Week’s Most Important Stories

1.     Qualcomm Ventures, the investment arm of Qualcomm Incorporated QCOM, has inked an agreement with Reliance Jio Platform, a wholly-owned subsidiary of Indian multinational conglomerate Reliance Industries Ltd., to acquire a 0.15% equity stake in the technology firm for $97 million.

The strategic deal will help Qualcomm rollout advanced 5G infrastructure and services across the subcontinent, while gaining a foothold in the budding technology enterprise. The partnership is also likely to offer lucrative revenue-generating opportunities for Qualcomm in a vast market.
 
2.     Ericsson ERIC recently secured a contract for an undisclosed amount to deploy private mobile networks across three airports in Paris, France. The deal will enable the company to facilitate a seamless transition to Industry 4.0 that will likely help make processes less wasteful, production lines more flexible and productivity higher through industrial automation.

Groupe ADP, Hub One and Air France have decided to utilize Ericsson’s state-of-the-art technologies to deploy a private mobile network covering Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget airports. This private mobile network will serve a professional ecosystem of more than 120,000 people who work at the three airports on a daily basis.

3.      Nokia Corporation NOK has partnered with Sri Lanka Telecom PLC, the national telecommunications services provider in Sri Lanka, to deploy a fiber-to-the-home (FTTH) network in order to cater to growing data demand.

Reinforcing its accelerated Fiber Expansion Project, the latest move enables SLT to bring high-speed broadband services to more than 200,000 businesses and consumers. The Fiber initiative is aimed at developing 2 million FTTH ports by 2022, connecting households, organizations and the government to ultra-high-speed broadband with the lowest latency.

4.      Viasat, Inc. VSAT has eliminated Internet speed limits for business jets equipped with a Ka-band satellite connectivity system, thus redefining in-flight connectivity services.

Touted as an “industry-first” move in the business aviation market, the removal of speed caps for Ka-band services will not only strengthen business-critical productivity but also promote enhanced customer experience with best-in-class in-flight entertainment services. These, in turn, will enable more efficient utilization of intensive passenger and flight crew applications.  

5.      As part of the rural broadband initiative, networking equipment maker ADTRAN, Inc. ADTN recently joined forces with Orange County Broadband Authority to deploy its fiber access platform — Total Access 5000 (TA5000).

The partnership will help Orange County to upgrade its network infrastructure and eliminate the digital divide. These industry-leading broadband connectivity initiatives will not only create numerous employment opportunities for the unemployed residents but also help to digitally update archives.

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, Juniper Networks has been the best performer with its stock rising 3.9%, while T-Mobile has been the biggest decliner with its stock decreasing 1.6%.

Over the past six months, T-Mobile has been the best performer with its stock appreciating 21.7%, while CenturyLink was the biggest decliner with its stock falling 44.8%.

Over the past six months, the Zacks Telecommunications Services industry declined 11.2%, while the S&P 500 recorded average loss of 3.6%.

What’s Next in the Telecom Space?

In addition to product launches, deals and 5G deployments, all eyes will remain glued to how the administration attempts to devise pre-emptive steps to thwart Chinese apps from data intrusion and safeguard the interests of domestic firms.

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Nokia Corporation (NOK) : Free Stock Analysis Report
 
ADTRAN, Inc. (ADTN) : Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Ericsson (ERIC) : Free Stock Analysis Report
 
Viasat Inc. (VSAT) : Free Stock Analysis Report
 
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