More From Ray Sheffer
Sprint’s liquidity must be maintained to fund capital investments
Sprint is cutting down on operating costs to manage high capital expenditures. But marginal cash flows aren’t alleviating Sprint’s liquidity concerns.
Wall Street’s View of AT&T on May 13
Out of 36 recommendations by Wall Street analysts on AT&T’s stock, half were “buy” recommendations and ~44.4% were “hold” recommendations. The remaining ~5.6% of the analysts recommended a “sell.”
Verizon on Past Acquisitions and go90
In 2014, Verizon acquired Intel’s (INTC) OnCue, an Internet TV service, which was to be used in the user interface of the go90 service.
What Do Wall Street Analysts Recommend for T-Mobile?
As of February 11, 2016, ~78.6% of analysts surveyed have given “buy” recommendations for T-Mobile, 17.9% have given “hold” recommendations, and ~3.6% have given “sell” recommendations.
AT&T’s wireline margins expand slightly in 4Q14
Despite the decline in wireline revenue, the segment’s operating income grew marginally by ~1% year-over-year, or YoY, during 4Q14.
Non-Pay TV Households: How Is AT&T Targeting Them?
Beginning in 4Q16, AT&T plans to initiate the three services—DIRECTV Now, DIRECTV Mobile, and DIRECTV Preview.
Why AT&T Might Sell Latin American Pay-TV Assets to Telefonica
Brazil was the largest contributor to AT&T’s revenue from Latin American operations during 3Q15.
AT&T’s Net Additions of Postpaid Customers Declined in 2Q15
On the positive side, growth in AT&T’s net additions of connected devices continued to be solid during 2Q15. AT&T added ~1.4 million connected devices during the quarter.
AT&T’s customer base continues modest growth in 4Q14
AT&T’s connected devices increased 21% year-over-year during 4Q14. The company added 1.9 million customers and connections in the fourth quarter.
Verizon Set to Launch Over-the-Top Service Soon
Verizon is leveraging its acquisitions of AOL, upLynk, OnCue, and EdgeCast for its new over-the-top service.
How Vodafone Performed in Italy in 3Q16
Vodafone service revenue in Itay fell ~8.8% YoY (year-over-year) to reach ~0.93 billion pounds.
Sprint’s Focus Is Its Cost-Cutting Initiative
Sprint (S) has an annual cost-cutting initiative of at least $2 billion for fiscal 2016. These cuts are expected to come from operating expenses.
Verizon’s Revenue Growth Should Slow down in 1Q15
Verizon (VZ) will report its 1Q15 results on April 21, 2015. It’s the largest US telecom company. It had a market capitalization of $200.08 billion as of April 13, 2015.
Sprint’s profitability should continue to decline in fiscal 3Q14
Looking at Sprint’s profitability, Wall Street analysts expect Sprint’s EBITDA for the quarter to decline by ~3% due largely to a lower revenue base.
How Was T-Mobile’s Prepaid Customer Growth in 4Q15?
During the quarter, T-Mobile’s prepaid subscribers increased robustly by ~8.1% YoY to reach ~17.6 million.
Will T-Mobile’s Earnings Grow in 1Q16?
T-Mobile is expected to report its 1Q16 results on April 26, 2016. According to Wall Street analysts, on an adjusted basis, T-Mobile’s earnings are expected to grow significantly year-over-year in 1Q16.
Wall Street’s Take on CenturyLink Leading up to Its 1Q16 Earnings
As of April 11, 2016, ~52.6% of Wall Street analysts’ recommendations for CenturyLink’s stock were “holds,” 15.8% were “sells,” and ~31.6% were “buys.”
What’s Happening with Frontier in the Internet Space?
Frontier continued to add broadband customers on a net basis in 1Q16. These net additions were 24,600 for the quarter.
Analyst Recommendations for Verizon on February 25
Most Wall Street recommendations for Verizon (VZ) were “hold” as of February 25, 2016. About 44.1% were “buy” recommendations, and there were no “sell” recommendations.
Verizon Best of Top 4 US Wireless Carriers in Network Performance
Verizon commanded the best customer retention rate among the top four carriers in the US in 2Q15.
What Does AT&T Expect for Video Customer Growth in 2016?
During the Deutsche Bank Media, Internet, & Telecom Conference, John J. Stephens talked about AT&T’s domestic video component after the DIRECTV merger.
AT&T’s Value Proposition in the US Telecom Space
As of April 5, 2016, globally, AT&T was the largest telecom player by market capitalization. China Mobile (CHL) followed.
How Did Vodafone Perform in Germany in Fiscal 3Q16?
In fiscal 3Q16, Vodafone’s mobile customers in Germany decreased ~3.6% YoY to reach ~30.4 million.
Wall Street’s View of AT&T
Out of 36 analyst recommendations, ~50% were “buys,” ~44.4% were “holds,” and ~5.6% were “sell” recommendations on AT&T’s stock.
Verizon’s Global Enterprise revenues should follow declining trend
In the first three quarters of 2014, Verizon’s Global Enterprise revenues declined by ~4.2%. They’re expected to decline by ~4% year-over-year in 2014.
Verizon Edge penetration rate doubles in 4Q14
According to Verizon, its Edge penetration rate increased significantly during 4Q14. Higher Edge penetration should positively impact its 4Q14 earnings.
21st Century Fox Is Still Focusing on Film Diversity
21st Century Fox’s Filmed Entertainment segment performed well in the last two quarters. The segment’s revenue grew by 5% year-over-year to $2.4 billion in 3Q15.
Select Earnings Metrics for T-Mobile and Its Peers
T-Mobile had a forward price-to-earnings ratio of 20.9x on November 18, 2015. Its forward five-year price/earnings to growth ratio was 0.65.
Telefonica’s 3Q15 Mobile Revenue Was Strong in Argentina
Mobile revenue in Argentina grew robustly by 21.6% YoY organically to reach 0.66 billion euros during the quarter. The mobile service revenue component increased 24.9% YoY organically.
Why Is Sprint Cutting Jobs?
According to Sprint, it has planned to rationalize annual costs by at least $2 billion from fiscal 2016.
Telefonica’s Mobile Component Dampened Revenue Growth in Spain
During 3Q15, Telefonica’s mobile revenue declined 2.6% YoY to 1.1 billion euros in Spain. A robust YoY increase in mobile data revenue limited the decline in mobile service revenues.
Sprint and T-Mobile: Network Performance on the Bottom Rungs
According to RootMetrics 2H14 national results, out of the four largest national wireless carriers, T-Mobile ranked third in terms of network speeds.
Sprint’s Postpaid Upgrades Increased during Fiscal 3Q14
Sprint’s postpaid upgrades increased to ~11.5% during fiscal 3Q14. During the quarter, the postpaid upgrades increased both sequentially and YoY.
What Drove TEF’s Mobile Revenue in Argentina in 4Q15?
During 4Q15, the data revenue stream of Telefónica’s mobile component rose by ~30.2% organically YoY to reach ~0.25 billion euros in Argentina.
What’s Fueling T-Mobile’s Growth?
Recently, T-Mobile’s chief financial officer and executive vice president shed light on the geographic segmentation of T-Mobile’s customer growth profile.
AT&T GigaPower to Reach over 14 Million Customers
AT&T GigaPower is a fiber-based, high-speed Internet service for consumers and businesses. With the DIRECTV transaction, the service will be expanded to reach 2 million additional customers.
How Much Did TEF’s Mobile Segment Grow in Germany in 4Q15?
Year-over-year, Telefónica’s mobile revenue rose by ~2.8% to reach ~1.8 billion euros in Germany.
CenturyLink’s Revenue on Par with Analysts’ Expectations in 3Q15
CenturyLink’s revenue increased by ~0.9% YoY to reach ~$4.6 billion during the quarter. The company’s revenue was almost even with Wall Street’s expectations.
Leveraging the Mobile Video Opportunity: Verizon and AT&T
The cross-sell potential for wireless services to DirecTV households was ~15 million. The opportunity for mobile video services was ~21 million households.
Google Starts Android Wear for Apple iPhones on August 31
As of August 31, 2015, Android Wear for iOS is operational on LG’s Watch Urbane.
Verizon’s Focus on Broadband through Wireline
Verizon is managing the secular challenges of the pay-TV space by focusing on its broadband offering in FiOS.
What Are AT&T’s Prospects in the Mexican Wireless Market?
During 3Q15, AT&T’s Mexican wireless operations generated ~$581 million of revenue.
Some Financial Dynamics of Altice’s Cablevision Transaction
After the approval of the Cablevision transaction by the New York Public Service Commission, Moody’s Investors Service cut Cablevision’s Corporate Family Rating from Ba2 to B1.
Investors should be aware of regulations in the telecom industry
In the US and around the world, the telecom industry is regulated because market forces can’t maintain competition within the highly capital-intensive industry.
Key customers in the telecom industry
Post-paid users pay telecom companies periodically. The users pay after they received the service. They typically subscribe to plans for a fixed term.
Why Is Sprint Offering a Discount to Competitors’ Customers?
In this part, we’ll look at one of the reasons behind Sprint’s 50% discount for competitors’ customers.
Valuation metrics that investors can use in the telecom industry
Investors often use different metrics to determine telecom companies’ relative valuation. Telecom is a capital-intensive industry with high fixed costs.
Investment opportunities in the US telecom industry
Investors that like the US telecom industry’s fundamentals—for example, stable cash flows and high dividend yield—may invest in telecom ETFs.
What was the key growth driver for AT&T’s wireline segment?
Adjusted revenue from IP-based strategic services grew by 14.3% YoY in 4Q14. Adjusted consumer wireline revenue increased by 2.4% during the quarter.
How Is Sprint’s Offer for Competitors’ Customers Faring?
Sprint’s offer to the customers of other wireless carriers is for monthly charges associated with the service plan as well as the access line.
Recommendations on AT&T: The Word on the Street
Out of 36 recommendations on AT&T’s stock, around half gave “buys.” The proportion of “hold” recommendations on the stock was ~44.4% as of April 18, 2016.
U-verse is a significant revenue stream for AT&T’s wireline segment
At the end of 2014, U-verse evolved as a substantial revenue stream for AT&T’s (T) wireline division. Consumers contributed ~96% to adjusted U-verse revenue during 4Q14.
How Were Verizon’s Internet and Pay TV Customer Acquisitions in 2Q16?
Verizon Fios Internet and video customer acquisitions have come down significantly on a net basis in 1Q16 from the levels in 1Q15.
Sprint ramps up promotional efforts to expand customer base
The launch of Apple’s iPhone 6 in September, just before the holiday season, was a key driver for Sprint’s increased promotional efforts during fiscal 3Q14.
What’s Next for Altice after Cablevision Acquisition?
At the end of 1Q16, Suddenlink and Cablevision had ~1.6 million and ~3.1 million customer relationships, respectively.
Why AT&T’s Next adoption rate may increase in 4Q14
One of the key factors that helped AT&T manage low churn levels is its installment plan—Next. Customers can own a smartphone without a down payment.
Wireless growth opportunities for AT&T in Mexico
AT&T is currently focusing on Mexico, a growing mobile market. Mobile subscribers in Mexico were a significant 105 million in 2013.
Verizon and Cablevision: Market Share after the Altice Transaction
An improving broadband proposition with higher Internet speeds should positively affect Cablevision (CVC), considering the competitive dynamics in its industry.
Direct 2 You: Sprint’s New Distribution Service Started on April 13
Sprint initiated the “Direct 2 You” service on April 13 in the Kansas City metro market. The service will be extended to Miami and Chicago on April 20.
Merger Update: Charter, Bright House, and Time Warner Cable
California is the only state where the merger between Charter Communications, Time Warner Cable, and Bright House Networks has yet to be approved. It could be approved as early as May 12.
A Look at Sprint’s Multiples on January 19, 2016
In this part, we compare Sprint’s earnings multiples with those of its peers in the US wireless telecom market.
What Scale Will Altice See following Its US Cable Acquisitions?
Let’s see what kind of scale Cablevision and Suddenlink may give Altice in the US cable space compared to some of its peers.
Sprint’s Positioning in the US Wireless Space
Sprint’s chief financial officer Tarek Robbiati discussed this second reason for the company’s 50% discount promotion.
What Kind of Growth Does Altice Expect for Cablevision?
On a YoY (or year-over-year) basis, Suddenlink’s revenue rose ~6.7% to reach ~$0.63 billion in 1Q16.
Understanding competition from other industries—cable companies
Telecom companies compete directly with cable companies—particularly in wired voice, data, and TV services. They compete in the residential and small business segments.
Why spectrum is the lifeblood of a wireless network
We mentioned how wireless phones communicate with cell towers on a frequency band. The band is called a spectrum. It’s the most valuable resource for a wireless company.
Why Charter’s Core Operating Profitability Improved in 1Q16
The growth trend in Charter’s core operating profitability further strengthened during the quarter. Charter’s adjusted EBITDA increased 10.4% YoY.
T-Mobile’s Capital Expenditures: Expected to Increase in 2Q15
T-Mobile’s capital expenditures are expected to grow 20.3% year-over-year to $1.1 billion in 2Q15. Wall Street expects T-Mobile to generate sufficient cash flows to fund its capital investments in 2Q15.
Sprint’s Value Proposition in the US Telecom Space
Sprint’s forward EV-to-EBITDA (enterprise-value-to-EBITDA) multiple was ~4.7x. This is the lowest among the top four US mobile players.
AT&T’s Ambitions in Mexico
America Movil’s Telcel and Telefonica Mexico currently dominate this wireless market. AT&T plans a significant LTE expansion into this market through 2018.
Inside Verizon’s Top Network Performance in Los Angeles
According to RootScore’s 1H16 report, Verizon, T-Mobile, and Sprint held their prior first, second, and fourth places, respectively, in network performance.
Verizon 3Q15 Earnings: The 600 MHz Spectrum Auction in 2016
Verizon’s CFO and EVP, Fran Shammo, talked about how important the 600 MHz or megahertz spectrum is for the company.
Sprint’s Revenue to Continue Its Fall in Fiscal 2Q15
Based on the Wall Street analysts’ consensus estimates, Sprint’s revenue is expected to fall ~4.5% year-over-year to reach ~$8.1 billion in fiscal 2Q15.
Level 3’s Revenue in 4Q15 below Wall Street Expectations
Level 3’s revenue was $2.1 billion in 4Q15. This figure was 0.5% below the consensus estimate of Wall Street analysts. In 4Q14, the company’s revenue was $1.9 billion.
Level 3’s 4Q15 Results: Market’s Reaction Was Positive
Level 3 Communications (LVLT) reported its 4Q15 results on February 4, 2016. The market received the results and guidance for 2016 positively, and the stock rose 6.9%.
Installment Plans Positively Affect Verizon’s Customer Retention
During 3Q15, Verizon continued to have the best customer retention among the top four telecom players.
Sprint’s Network Performance in Denver Improves in 1H15
Sprint received the highest score for network speed in 1H15 among the four national carriers in the Denver market. This is a significant achievement for Sprint.
Tablets Help Verizon Manage Churn and Increase Usage
Tablets should have contributed to managing Verizon’s churn. In 4Q14, Verizon had the best postpaid churn among the four largest US wireless carriers.
Sprint’s Adjusted Earnings Nearly Doubled in Fiscal 3Q15
Sprint’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew robustly on a YoY basis from ~$1 billion in fiscal 3Q14 to ~$1.9 billion in fiscal 3Q15.
What Do Analysts Recommend for Verizon?
The majority of analysts recommended “holds” on Verizon as of April 25, 2016. These recommendations represented ~66.7% of the total.
Sprint’s Value Proposition in the US Telecom Industry
As of January 21, 2016, EV-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) was 5.6x for Sprint, 7x for AT&T, 6.3x for Verizon, and 7.3x for T-Mobile.
Sprint Extends 50% Promotional Offer for Competitors’ Customers
During fiscal 3Q15, Sprint had positive postpaid customer additions. Sprint platform’s postpaid additions grew YoY significantly from just ~0.03 million in fiscal 3Q14 to reach ~0.5 million during fiscal 3Q15.
Net Additions to AT&T’s Postpaid Clients Set to Collapse in 2Q15
AT&T’s net postpaid additions were a significant ~1 million in 2Q14. That’s much higher than what’s being projected for 2Q15.
Wireless is Verizon’s Core Focus Area
Wireless is the key segment of Verizon’s business. It generated revenue and EBITDA of ~$22.6 billion and ~$9.9 billion, respectively, in 2Q15.
Verizon’s Performance as Pay-TV Provider in 2Q15
Verizon’s CEO and chairman highlighted the importance of proactively addressing pay-TV industry challenges.
How Verizon’s Network Performance Stood up to Peers
Verizon got the top spot in all of RootMetrics’ performance categories in 2H15, although it shared first place in the text performance category with AT&T.
Sprint’s Fiscal 3Q15 Revenue Lower than Analysts’ Expectations
Sprint’s revenue again missed Wall Street’s expectations. Revenue came in ~1.6% below the consensus estimate.
Sprint Shares Top 1H15 Spot for Call and Text Quality in Lansing
Sprint shared the top spot in call performance with AT&T and Verizon in the Lansing market for 1H15. In text performance, Sprint shared the top spot with T-Mobile and AT&T.
Verizon’s Edge Take Rate Should Increase in 2015
Edge’s take rate—customers choosing the plan—increased significantly from 1Q14 to 4Q14. Verizon expects it to expand to the range of 34%–35% in 2015.
Frontier’s 3Q15 Earnings Surprise Wall Street Analysts
Frontier’s earnings in 3Q15 surprised Wall Street analysts, as it was expected to have loss for the quarter.
Is T-Mobile’s Customer Growth Sustainable?
T-Mobile’s solid postpaid customer growth continued in 3Q15. Its postpaid subscriber base grew by 17.3% year-over-year to approximately 30.4 million.
Wall Street’s Take on Sprint as of March 11, 2016
Sprint’s stock price movement in the one-month and three-month periods were in the positive territory as of as of March 11.
AT&T Toe to Toe with Comcast, Verizon, and Netflix
In broadband, AT&T’s and Comcast’s coverages are comparable, but Verizon’s operations are smaller. In scale in content, AT&T and Comcast outweigh Netflix.
Charter’s Video Subscribers: The Path from Losses to Gains
At the end of 1Q16, Charter’s video customers had increased 0.9% YoY and reached 4.4 million. This was well above the company’s estimated video penetration level for the quarter.
Will T-Mobile’s Core Operating Profitability Grow in 2Q16?
T-Mobile is expected to report its 2Q16 results on August 4, 2016. According to analyst consensus, T-Mobile’s core operating profitability is expected to expand significantly YoY.
How Do Media Networks Make Money?
Media networks face stiff competition for acquisition and distribution of content. Quality and exclusivity add to competition across the media value chain.
Altice Completes the Acquisition of Cablevision
With the merger of Charter Communications (CHTR), Bright House Networks, and Time Warner Cable (TWC), the US cable space has consolidated even more.
Verizon’s Revenue Will Likely Grow Marginally in 2Q15
According Wall Street analysts as of July 10, 2015, there will likely be low growth in Verizon’s revenue during 2Q15. They expect the revenue to rise ~3% YoY.
Verizon’s EBITDA Is Expected to Rise Modestly in 2Q15
According to Wall Street analysts’ consensus as of July 10, on an adjusted basis, Verizon’s EBITDA is expected to rise moderately by ~5% YoY during 2Q15.
Verizon Secures the Top Position in a Network Study
Recently, Verizon 4G secured the top spot nationally in PCMag’s Fastest Mobile Networks 2016 report.