The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (Dec 8)

by | Dec 10, 2023 | TSB

This was a muted week for the ten stocks we track. The Fab Five gained $133 billion in value with more than half of that coming from Apple (+$70 billion). Three of the Fab Five barely budged: Microsoft (-$2 billion), Amazon (+$4 billion), and Meta/ Facebook (+$20 billion). News that Apple has passed (again) the $3 trillion market cap mark largely went ignored as November jobs data released last Friday took center stage.

The Telco Top Five had a similarly ho-hum week with T-Mobile trading off value with Charter. Jessica Fischer, the CFO of Charter, appeared at the UBS Global Media and Communications Conference where she announced that the broadband provider would likely lose broadband customers in the fourth quarter given October and November results (mobile net additions and monthly churn, however, appear to be on track). Their stock price dropped just over 8% on Tuesday and remained down for the remainder of the week.

While much of the blame was laid on the Disney re-transmission dispute, it’s interesting to note that Charter has embarked on an aggressive 1 Gbps promotion in markets where fiber competition is currently present (and not implemented the promotion described below where competition is nascent or nonexistent). Below are the pricing options for Sedalia, Missouri, a market facing competition from both Socket Telecom and Fastwyre (Jim’s former employer):

While Spectrum’s traditional promotional pricing for 1 Gbps speeds has been $89.99 for 12 months (and regular price is currently $119.99/ mo. with autopay), this $39.99 for 24-month promotion (67% off what existing 1 Gbps cable modem customers are paying) has not surfaced until now. Charter even appears to have provided this to the ~600 RDOF homes that they recently lit with RDOF dollars in the Harrisonville/ Pleasant Hill area. 1 Gbps for the price of 300 Mbps for 24 months – who’d have thunk? That’s a $1,920 discount over the two-year period.

The movement from regular pricing of $119.99/ mo. to the deeply discounted and long-duration $39.99/ mo. that started earlier this month appears to be broad. All of Spectrum’s Kansas City metro area (where Google Fiber already has a deep presence, and AT&T Fiber is just getting rolled out) appears to be covered. We found it interesting that less competitive areas like Arnold, MO (suburb of St. Louis) and Gordonville, MO (just outside of current and planned fiber build footprint by i3 Broadband/ Circle Fiber in Jackson and Cape Girardeau) are still at the legacy $89.99/ mo. promotion. We found these deep and lengthy promotional actions intriguing in light of Jessica’s comments earlier in the week.

The bigger news of the week was AT&T’s Open RAN announcement (here). We do not have enough time this week to describe the impact of this on the wireless equipment community, but found one of the sentences in the announcement to be quite interesting:

“The commitment to Open RAN is a key part of AT&T’s strategy to provide the seamless connectivity America needs. With owner’s economics in both wireless and fiber, AT&T aims to become the largest, fastest growing converged fiber company with a modern, competitive wireless network.”

We will explain more about why fiber availability is critically important to Open RAN and how this might fit into the GigaPower venture in next week’s Brief. We are glad that AT&T provided us with a “Top Six” event this late in the year.

Details are below. Have a great remainder of the weekend and Go Chiefs!

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