Zacks Industry Outlook Highlights: AT&T, Verizon Communications, Comcast, Time Warner Cable and MetroPCS

Zacks Industry Outlook Highlights: AT&T, Verizon Communications, Comcast, Time
                          Warner Cable and MetroPCS

PR Newswire

CHICAGO, Feb. 1, 2013

CHICAGO, Feb. 1, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Telecommunications, including AT&T (NYSE:T), Verizon Communications
Inc. (NYSE:VZ), Comcast Corp. (Nasdaq:CMCSA), Time Warner Cable Inc.
(NYSE:TWC) and MetroPCS (NYSE:PCS).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

A synopsis of today's Industry Outlook is presented below. The full article
can be read at 

Link: 
http://www.zacks.com/commentary/25646/telecom-industry-stock-outlook-feb-2013

Despite the massive growth in fiber-to-the-home networks, we believe wireless
networks will be the key player in the telecom industry growth story. In
addition, the sector is witnessing a fundamental change. Earlier, it was voice
calls that brought money to the operators. Currently, data and video have
become the focus. New network standards aim at faster data connectivity, quick
video streaming with high resolution, and rich multimedia applications.

Currently, the U.S. has approximately 300 million wireless subscribers. Mobile
broadband has become the most lucrative source of revenue for the wireless
operators. Massive growth of data buoyed by smartphone revolution is the main
reason for this favorable scenario. Global revenue from mobile broadband is
expected to reach $123-$125 billion in 2016.

Spectrum Crunch & Market Saturation

The U.S. wireless industry is facing acute spectrum shortages, sometime
resulting in data packet dropping. Carriers are investing heavily for more
effective utilization of their existing spectrum holding and are trying hard
to add more spectrums to their portfolio. In addition to the four nationwide
carriers, all the smaller pre-paid wireless operators are also opting for a
sound LTE network to offer hassle free broadband video streaming and data
transmission.

Meanwhile, smartphone penetration has crossed more or less half of the total
U.S. post-paid wireless subscribers. Recently, pre-paid carriers have decided
to offer high-end smartphones, such as iPhone 5.

Severe spectrum crunch coupled with gradual smartphone market saturation is
forcing the wireless operators to look for other options to raise revenue.
These include new pricing plan, a shift from unlimited data usage to
tier-based data usage, and higher upgrade fees for smartphones in order to
offset handset subsidies. In fact, the average revenue per user for most of
the wireless carriers is rising over the last two years and is expected to
grow in the long term primarily due to massive growth in mobile data usage.

As smartphone users are now increasingly downloading multimedia contents,
video has become the primary network traffic. What is more interesting, in
addition to download, the smartphone and tablet users are up-linking more and
more video content and, in turn, becoming broadcasters in their own right.
Several industry researchers predicted that video may account for 60% of total
network traffic by the end of 2012.

Mergers and Acquisitions to Continue

Despite the failed merger agreement between AT&T (NYSE:T) and T-Mobile USA, we
believe the U.S. telecom industry will witness more M&A deals in 2013. AT&T
needs spectrum to compete with its bigger rival, Verizon Communications Inc.
(NYSE:VZ).

Verizon bought spectrum from major cable MSOs including Comcast Corp.
(Nasdaq:CMCSA), Time Warner Cable Inc. (NYSE:TWC) and Bright House Networks.
Prepaid wireless operator MetroPCS (NYSE:PCS) is currently undergoing FCC
review for a merger deal with T-Mobile USA.

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