Telecom Stock Roundup: Verizon to Retain AOL Websites, Vodafone Enters UK Fixed Broadband Market

Though most telecom stocks gained value over the last week, the sector did not witness any consequential events. However, a few developments are worth noting. Putting speculations to rest, Verizon Communications Inc. VZ has confirmed that it will retain all online content businesses of AOL Inc. AOL.Notably, Verizon announced its decision to acquire AOL for a consideration of $4.4 billion last month. The deal is expected to be sealed this summer.  

Meanwhile, AT&T Inc. T is forging ahead in the Internet of Things (IoT) space with its strategic partnerships and initiatives.Recently, the company sealed IoT deals with more than 136 companies. Since 2015, the company has reached agreements with industries like automotive, agriculture, energy, healthcare, aviation, security, supply chain logistics and transportation.

In a separate development, Windstream Holdings Inc. WIN recently launched cloud-to-cloud disaster recovery management solutions which willreplicate mission-critical virtual servers and data to provide an alternative system to the cloud-based disaster recovery system.

Outside the U.S., Vodafone Group plc. VOD has started offering fixed-line broadband (Internet) service to its residential customers in the U.K. Moreover, Liberty Global Plc. LBTYA is eyeing Ireland's digital terrestrial television DTT broadcaster – TV3 – as a possible takeover target. (Read the last Telecom Stock Roundup for Jun 11, 2015.)

Recap of the Week's Most Important Stories

1.    Verizon will retain all online content businesses of AOL. The most popular website of AOL is the Huffington Post with around 200 million audiences. Other websites include Tech Crunch, Engadget, Moviefone and MapQuest. Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth.

In 2014, AOL produced 80 original episodes of video content and the company has planned to step up the number to 3,600.  (Read More: Verizon to Retain Online Content Business of AOL.)

2.    Vodafone Connect – the company's new fix-line Internet service is being offered in three tiers – Broadband (ADSL up to 17Mbps), Superfast Fibre (FTTC up to 38Mbps), and Ultrafast Fibre (FTTC up to 76Mbps). Vodafone will utilize the fixed broadband infrastructure of Cable and Wireless, which the company had acquired in Jul 2012, to provide the service. The service will initially be available to existing customers in select locations only and that too at a cheaper price.  (Read More: Vodafone's Connect Service to Fortify Fixed Broadband in UK.)

3.    Liberty Global is in talks with the owners of Ireland's digital terrestrial television DTT broadcaster – TV3 – regarding a possible acquisition of the channel. In recent years, Liberty Global has been extensively investing in the Irish market. The company already owns UPC Ireland – a leading cable TV, telephone and broadband company.  Moreover, last year, it procured Irish Wi-Fi provider Bitbuzz. The company also has a stake of approximately 6.4% in ITV plc – the largest commercial TV broadcaster in the U.K. (Read More: Is Liberty Global Mulling TV3 Ireland Purchase?)

4.    AT&T is gaining a leading position in the IoT space.In the first quarter of 2015, the company connected more than 945,000 smart devices, highlighting an increase of 70% year over year. AT&T also boasts nearly 22 million connected devices on the IoT platform. By the end of 2015, the company aims to connect about 50% of the new passenger vehicles in the U.S. Meanwhile, over 40% of the farm machines in the U.S. are linked by AT&T.  (Read More: AT&T Leads the IoT Space, Signs Multiple Deals.)

5.    Windstream recently launched cloud-to-cloud disaster recovery management solutions.Major advantage of the cloud-to-cloud disaster recovery system is that it is a hardware free approach providing continuous replication and instant data recovery. This innovative recovery system is a cost-effective and extremely strong Disaster Recovery as a Service solution. Windstream's cloud-to-cloud recovery system uses the enterprise-class cloud replication software of Zerto. (Read More: Windstream Holdings to Provide Disaster Recovery Service.)

Price Performance

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

Over the last five trading sessions, share price movement of most major telecom stocks was positive. Sprint Corp. S gained the maximum value of 3.30% while DISH Network Corp. DISH depreciated the most at 0.80% over the same time frame. Similarly, over the last six months, the price performance of key telecom stocks was mostly positive with America Movil SAB AMX being the sole exception. T-Mobile US Inc. TMUSand Sprint rallied a considerable 58.45% and 18.14%, respectively, over the same time period.

What's Next in the Telecom Sector?

In the coming week, beleaguered mobile handset developer BlackBerry Ltd. will release its first quarter of fiscal 2016 financial results. The market will closely evaluate the results, looking out for any sort of turnaround for the company, which was once the king of smartphone. In addition, Canadian cable multi service operator Shaw Communications Inc. will also release its third quarter of fiscal 2015 financial results. 

Furthermore, the market is eagerly waiting for the Federal Communications Commission's (FCC) decision regarding the proposed $48.5 billion merger deal between AT&T and DIRECTV. The FCC is likely to announce its verdict about this deal within this month.

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