Zacks Industry Outlook Highlights: AT&T, CenturyLink, Qualcomm, Comcast and LM Ericsson AB

CHICAGO, Nov. 8, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Telecommunications, including AT&T (NYSE: T), CenturyLink Inc. (NYSE: CTL), Qualcomm Inc. (Nasdaq: QCOM), Comcast Corp. (Nasdaq: CMCSA) and LM Ericsson AB (Nasdaq: ERIC).

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

http://www.zacks.com/stock/news/64179/Telecom+Stock+Outlook+-+Nov.+2011

The telecommunications industry benefits from: (1) an overall improving global economy, although facing fluctuations due to sovereign debt crisis, (2) significant technological inventions and innovations that make even a mature market like the U.S. highly lucrative for the telecom operators.

Several countries throughout the world have undertaken economic stimulus plans as a way to get rid of the recession. Huge government expenditures -- including the U.S. broadband infrastructure development program and similar structural subsidies in China and India -- have become a boon for telecom service providers and equipment manufacturers.

Furthermore, even as the global economy recovers slowly, demand for real-time voice, data and video increases by leaps and bounds. These developments are enabling the telecom service providers to undertake large network extension while upgrading plans.

Technological Innovations

Smartphones and tablets have become the next-generation choice and are increasingly taking over market share from the basic mobile handsets. Although the economy is under recovery phase, and we are not completely out of the woods, the growth in the smartphone market maintains its impressive trend.

This reflects a shift in consumer preference toward application-rich devices from ordinary mobile handsets used primarily for voice telephony. Smartphones are generally characterized by very powerful operating systems capable of supporting a variety of services and applications that need very high-speed network infrastructures.

Various industry sources estimate that smartphone shipments as a percentage of total mobile handset shipment are expected to increase by 58% by 2011 over the last year. This opportunity provides scope for telecom service providers, equipment developers, chipset manufacturers and wireless tower operators to retain new users and grow revenues moving forward.

Less than a decade ago, the telecom operators in the U.S., Western Europe, and Japan were upgrading their existing networks to high-speed 3G technologies. At present, the world telecommunications industry is talking about the installation of next-generation super-fast 4G technologies.

Several giant telecom operators globally are funding projects to deploy super-fast 4G networks of WiMAX and LTE (Long-Term Evolution). As of now, 19 LTE networks are commercially operational throughout the world. Cable TV operators are also upgrading their networks with high-speed DOCSIS 3.0 architecture.

The GSM Association has forecasted that within next 5 years, telecom operators will invest approximately $100 billion to upgrade their respective networks for accommodating hassle free transmission of mobile data and video traffic. The major technical areas will be High-Speed Packet Access (HSPA), 3G mobile broadband, and next-generation (4G) LTE. One simple example of this significant rate of growth is that LTE network, which was globally first deployed in late 2009, at present provides over 1 million connections.

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

Competition and Consolidation

Massive technology invention and innovation have resulted in significant competitive atmosphere within the telecommunications industry. Product life-cycle and upgrade-cycle have been reduced drastically since several firms are coming out with new types of products and services within a short span of time. As a result, we are witnessing hectic merger and acquisition activities to consolidate the market share.

The biggest of the merger and acquisition activity is AT&T's (NYSE: T) proposed buyout of T-Mobile U.S. If this deal gets regulatory approval, it might become the largest acquisition in this industry in the post-recession period. However, this deal is facing stiff hurdles from the U.S. Department of Justice. CenturyLink Inc. (NYSE: CTL) has acquired Quest Communication, Qualcomm Inc. (Nasdaq: QCOM) obtained Atheros Communications, and Comcast Corp. (Nasdaq: CMCSA) has purchased NBC Universal's 51% stake. Further, LM Ericsson AB (Nasdaq: ERIC) has acquired Telcordia Technologies.

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