Zacks Industry Outlook Highlights: Telus, Telefonica Brasil, Research In
Motion, Polycom and Crown Castle International
CHICAGO, May 31, 2013
CHICAGO, May 31, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Telecom, including Telus Corp. (NYSE:TU), Telefonica Brasil S.A.
(NYSE:VIV), Research In Motion Ltd. (Nasdaq:BBRY), Polycom Inc. (Nasdaq:PLCM)
and Crown Castle International Corp. (NYSE:CCI).
A synopsis of today's Industry Outlook is presented below. The full article
can be read at
The telecommunications industry as a whole offers a number of attributes that
are difficult to ignore from the standpoint of investors.
oTelecommunications is a necessary utility: The need for telecom in both
rural and urban areas, and its role in the infrastructure of both
developed and developing markets, will continue to grow. In addition,
economic stimulus plans in the U.S. and throughout the world should boost
select service providers and equipment manufacturers.
oSpectrum Auction: On Sep 28, 2012, the FCC decided to free up spectrum
currently used by TV broadcasters for commercial wireless networks and to
deploy a nationwide interoperable public-safety broadband network. Huge
proliferations of smartphones, tablets, and several other pocket-sized
mobile devices have significantly increased the demand for bandwidth for
seamless wireless connectivity. The spectrum auction is expected to shore
up $15 billion in the U.S. government exchequer.
oStrong Demand: A recovering economy speeds up the demand for real-time
voice, data, and video manifold. The FCC has estimated that within the
next five years, mobile-data demand will grow 25-50 folds from its current
level. These latest developments are enabling the telecom service
providers to undertake large network extensions while upgrading plans. The
companies that match well with the aforementioned considerations include
Telus Corp. (NYSE:TU), Telefonica Brasil S.A. (NYSE:VIV), Research In
Motion Ltd. (Nasdaq:BBRY), Polycom Inc. (Nasdaq:PLCM) and Crown Castle
International Corp. (NYSE:CCI). All these stocks currently have a Zacks
Rank #2 (Buy).
Generally the telecommunications companies that are under pressure have high
debt levels and large financial leverage ratios or are unable to cope with the
recent market trends. Other risks that remain are as follows:
oPotential Business Slowdown: Lower overall top-line sales among carriers
are expected to continue to weigh on capital spending decisions -- a major
problem faced by equipment vendors. The companies are expected to remain
focused on improving their balance sheets, financial discipline and free
oProduct Overlapping: We may see more product sharing deals between
telecom, cable TV and satellite TV operators as each of these players are
trying to get a foothold into each other's territory. Even pay-TV
services, offerings to business enterprises, and mobile backhaul and
metro-Ethernet segments may witness more convergence. Mobile phone makers
are now gradually offering tablets (small laptops); chipset manufacturers
are offering personal computers and mobile phones are frequently
interchanging their areas of operations.
oIncreased Competition: Technological upgrades and breakthroughs have
resulted in cutthroat price competition. Product life-cycle and
upgrade-cycle have been reduced drastically as several firms are
introducing new products and services within a short span of time.
Increasing competition is forcing every player to offer heterogeneous and
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