The U.S. telecom stocks witnessed a relatively flat trajectory on an average over the past week as the Biden administration announced fresh restrictions against China-based telecommunications equipment manufacturer Huawei, putting domestic suppliers in a spot of bother. Extending tariff exclusions until Sep 30, 2021 on about 99 categories of medical products from China, including masks, X-ray tables and gloves to aid the fight against COVID-19, Washington meted out tough steps against Huawei, thereby offering it no respite from the change in regime. This created a sense of insecurity within the industry as it remained circumspect of the government’s future course of action.
Reinforcing a hard stance for export to the beleaguered firm, the administration amended some licenses for companies that supply raw materials to Huawei, putting in jeopardy certain existing contracts already in force. The amended terms make it rather impossible for the companies to supply items that can be used with 5G devices, even if the said items have nothing to do with 5G functioning. Simultaneously, the FCC has placed Huawei along with four other China-based telecom firms, namely ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology, and Dahua Technology on the blacklist, deeming them threats to the national security. This, in turn, is likely to prohibit domestic firms from using their communications equipment or services. The FCC has also set the ball rolling to revoke the authorization of China Unicom Americas, Pacific Networks and its wholly owned subsidiary ComNet to provide U.S. telecommunications services. This follows a show-cause notice issued in April 2020 to show legitimate reasons as to why their licenses should not be revoked on grounds of national security threats.
As the political slugfest for 5G supremacy continued at the backdrop, a district judge removed Chinese smartphone maker Xiaomi from a blacklist that barred U.S. companies from investing in it. Citing lack of substantial evidence about risks to national security, the judge suspended the investment ban against the firm. Meanwhile, despite several cyber threats and recent incidents of hacking, the Biden administration is not yet planning to set up government surveillance of the U.S. Internet as it remains mindful of the privacy and civil liberties implications that could arise. Instead, the government plans to focus on strict partnerships and improved information-sharing with the private-sector companies that already have broad visibility into the domestic Internet to thwart cyber-theft and data intrusion efforts.
Regarding company-specific news, collaborations, acquisition, strategy unveiling and product launch primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1.
Nokia Corporation
NOK
has inked a
slew of contracts with leading cloud operators
to develop cloud-based 5G solutions to augment its market presence within the 5G domain. The collaborations will support new consumer and enterprise use cases for seamless deployment of 5G services.
In particular, the collaborations intend to identify certain 5G use cases to showcase the efficacy of the components of 5G architecture against security threats. It aims to demonstrate how potential risks are mitigated through standardized 5G security features that also abide by the related compliance requirements. The enhanced cybersecurity capabilities on display are likely to allay deep-rooted fears and mistrust within business enterprises triggered by malicious cyber threats from data hackers.
2. Few months after it announced its intent to buy the chip startup,
Qualcomm Incorporated
’s
QCOM
unit,
Qualcomm Technologies, Inc., has acquired NUVIA
for a stellar valuation of $1.4 billion (excluding working capital and other adjustments). Markedly, the deal is likely to uplift the San Diego, CA-based chip giant’s position in the global 5G chipset arena on the back of NUVIA’s expertise in high performance processors for compute-intensive devices and applications.
With Qualcomm trying to take its technological facet a notch higher with the incorporation of high-performance CPUs across flagship smartphones, infrastructure networking and extended reality solutions, the latest move is primarily aimed at catering to the growing demands of next-gen 5G computing in the dynamic tech industry.
3.
AT&T Inc.
T
recently affirmed its earlier guidance for 2021 and offered key insights about its long-term objectives. The company also
unveiled its 5G strategy
while shedding some light on its continued business transformation initiatives to create long-term value for shareholders.
AT&T is increasingly focusing on its customer-centric business model to attract and retain customers for a lower churn rate. The company is witnessing healthy momentum in its postpaid wireless business with increased adoption of higher-tier unlimited plans. This, in turn, is expected to result in year-over-year growth in wireless customers with unlimited tariff plans.
4.
Ericsson
ERIC
has collaborated with a Belgium-based telephone service company — Telenet — to modernize the latter’s existing network infrastructure consisting of 2G/3G/4G network. This will pave the path for a faster, cost-effective and energy-efficient connectivity on the back of Ericsson’s 5G expertise. Markedly, Telenet is touted as the country’s largest provider of cable broadband services.
Apart from establishing a future-proof network, the Swedish telco equipment vendor will be responsible for the nationwide deployment of 5G technology. Consequently,
the rollout of an optimized 5G network will help Telenet
to not only bolster innovation with several technological advancements but also tap lucrative opportunities.
5.
BlackBerry Limited
BB
has introduced new critical event management (CEM) solution —
BlackBerry Alert
— to help commercial organizations respond to disruptive events.
The solution has been built on BlackBerry’s expertise in providing CEM solutions to the public sector with its AtHoc product line. It is available to customers, both small businesses and large enterprises, as a software-as-a-service solution or a fully-managed service.
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, Arista has been the best performer with its stock gaining 6%, while Verizon was the biggest loser with its stock falling 2.4%.
Over the past six months, Arista has been the best performer with its stock appreciating 32.6%, while Bandwidth has lost the maximum at 25%.
Over the past six months, the Zacks Telecommunications Services industry rose 1.6% on average, while the S&P 500 has gained 21.9%.
What’s Next in the Telecom Space?
In addition to 5G deployments and product launches, all eyes will stay on how the Biden administration safeguards the telecom sector against probable external threats.
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