Let’s dig into the relative performance of Lumen (NYSE:LUMN) and its peers as we unravel the now-completed Q4 terrestrial telecommunication services earnings season.
Terrestrial telecommunication companies face an uphill battle, as they mostly sell into a deflationary market, where the price of moving a bit tends to decrease over time with better technology. Without dependable volume growth, revenue growth could be challenged. Unfortunately, broadband penetration in their core US market is quite high already. On the other hand, data consumption from streaming entertainment and 5G expansion could provide a floor on growth for the next number of years. As if that wasn't enough to worry about, competition is intense, with larger telecom providers and hyperscalers expanding their own networks.
The 4 terrestrial telecommunication services stocks we track reported a very strong Q4. As a group, revenues beat analysts’ consensus estimates by 0.8%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.2% since the latest earnings results.
Best Q4: Lumen (NYSE:LUMN)
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE:LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Lumen reported revenues of $3.33 billion, down 5.3% year on year. This print exceeded analysts’ expectations by 4.2%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EPS estimates.
"We made material progress strengthening our financial position, transforming our corporate functions, and building the backbone for the AI economy," said Kate Johnson, president and CEO of Lumen.
Lumen Total Revenue
Lumen scored the biggest analyst estimates beat of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 28.6% since reporting and currently trades at $3.59.
Operating primarily through its majority-owned subsidiary UScellular and wholly-owned TDS Telecom, Telephone and Data Systems (NYSE:TDS) provides wireless, broadband, video, and voice communications services to 4.6 million wireless and 1.2 million broadband customers across the United States.
Telephone and Data Systems reported revenues of $1.24 billion, down 5.5% year on year, outperforming analysts’ expectations by 1%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates.
Telephone and Data Systems Total Revenue
The stock is down 6% since reporting. It currently trades at $37.25.
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Cogent reported revenues of $252.3 million, down 7.3% year on year, falling short of analysts’ expectations by 2.5%. Still, it was a satisfactory quarter as it posted a solid beat of analysts’ EPS estimates.
Cogent delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 33% since the results and currently trades at $53.62.
Operating as a majority-owned subsidiary of Telephone and Data Systems since its founding in 1983, US Cellular (NYSE:USM) is a regional wireless telecommunications provider serving 4.6 million customers across 21 states with mobile phone, internet, and IoT services.
U.S. Cellular reported revenues of $970 million, down 3% year on year. This result surpassed analysts’ expectations by 0.6%. Overall, it was an exceptional quarter as it also put up a solid beat of analysts’ EPS estimates.
U.S. Cellular delivered the fastest revenue growth among its peers. The stock is up 2.7% since reporting and currently trades at $69.04.
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