In a recent report, Morgan Stanley analysts gave an updated look at telecom services stocks after mostly in-line earnings and guidance were reported in the space during Q4. Analysts see sources of both headwinds and tailwinds for the sector in coming months.
Recent headlines
The Morgan Stanley report includes a breakdown of recent news for the industry. There has been a long list of developments in the telecom world that could have material effects on the future of the business. The report lists the conclusion of the AWS-3 wireless spectrum auction, the FCC’s announcement of plans to regulate broadband and the recent pickup of tower, wireline and data center deals as news items worthy of attention.
Earnings summary
In the wireless space, iPhone 6 numbers in Q4 were huge, and churn rates and upgrades were near record levels. Equipment revenues, margins and guidance were strong, but service revenue and average revenue per user (ARPU) numbers were soft.
In the wireline arena, analysts see continued pressure on revenue and margins. In particular, broadband adds for the quarter were extremely weak as cable appears to have gained share.
What’s next?
Looking forward, analysts will be watching Washington for any possible merger disruptions. In March, Morgan Stanley will be hosting the Technology, Media & Telecom Conference in San Francisco.
Stock picks
The report also names Morgan Stanley’s top five telecom services stock picks: Crown Castle International Corp CCI, Rogers Communications Inc RCI, Cyrusone Inc CONE, T-Mobile US Inc TMUS and SBA Communications Corp SBAC.
Edge Rankings
Price Trend
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