| 2018-10-22 12:28:08|
VZ, T… 12:28 10/22 10/22/18
Fly Intel: What to watch in telecom sector earnings reports
Verizon (VZ) is scheduled to report quarterly results before the market opens on October 23, while AT&T (T) is scheduled to report after the market closes On October 24. 1. OUTLOOK: When Verizon reported its second quarter results on July 24, the company said it sees FY18 consolidated revenue growth at low-to-mid single-digit percentage rates on a GAAP reported basis. This update to full year guidance is due to better-than-expected equipment revenue trends. Consensus at the time was $129.56B. The impact of revenue recognition on EPS for FY18 will be between 27c and 31c. The accretive benefit to FY18 consolidated operating income is expected to moderate in 2019 and become insignificant in 2020, as the timing impacts to revenues and commission costs converge. Low single-digit percentage growth in adjusted EPS in 2018, before the net impact of tax reform and the revenue recognition standard. Capital spending for 2018 to be closer to the lower end of the range of $17B-$17.8B, including the commercial launch of 5G. When AT&T reported its second quarter results on July 24, the company raised its FY18 adjusted EPS guidance to the high end of $3.50 range. Consensus estimates at that time were $3.40. 2. NET NEUTRALITY: On October 17, the New York Times reported that New York attorney general Barbara Underwood subpoenaed over a dozen telecommunications trade groups, lobbying contracts and Washington advocacy organizations looking to examine whether the groups submitted millions of fraudulent public comments to influence a key federal decision on internet regulation. Some of the groups played a highly public role in last year's battle when the FCC voted to revoke regulations that classified internet service providers as public utilities and Underwood is investigating the source of over 22M public comments submitted to the agency, millions of which were provided using temporary or duplicate email addresses, while others recycled identical phrases. On October 1, the Washington Post reported that the Trump administration is planning to sue California in a move to block what some experts have described as the toughest net neutrality law ever enacted. California adopted its own rules requiring internet providers to treat all web traffic equally on Sunday and hours later, DoJ officials said they would take the state to court on the grounds that the federal government, not state leaders, has the exclusive power to regulate net neutrality. 3. SPRINT ADMITS NETWORK IS SUBPAR: On September 28, the Verge reported that BTIG analyst Walt Piecyk tweeted a recent filing that Sprint (S) admitted that its LTE network is much worse than all of its competitors, including AT&T, Verizon, and T-Mobile (TMUS). The Verge noted that Sprint is in the process of seeking to show regulators that its pending merger with T-Mobile is good for the industry, instead of a harmful contraction of a limited market that badly needs competition.
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