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For Immediate Release
Chicago, IL – September 16, 2024 – Today, Zacks Equity Research discusses Orange S.A. ORAN, SK Telecom Co., Ltd. SKM and KT Corp. KT.
Industry: Wireless - Non-U.S.
Link:https://www.zacks.com/commentary/2335760/3-wireless-non-us-stocks-set-to-gain-from-positive-industry-vibes
The Zacks Wireless Non-US industry appears well poised to benefit from healthy demand trends stemming from the increasing user propensity to stay connected in this digital age. However, high capital expenditures for infrastructure upgrades, margin erosion, supply-chain disruptions due to geopolitical conflicts and high customer inventory levels have dented the industry’s profitability.
Nevertheless, Orange S.A., SK Telecom Co., Ltd. and KT Corp. are likely to gain from significant long-term growth opportunities across the industry and rising demand for scalable infrastructure for seamless wireless and fiber connectivity, with the wide proliferation of IoT and accelerated 5G deployment.
Industry Description
The Zacks Wireless Non-US industry comprises mobile telecommunications and broadband service providers based on foreign shores. These companies primarily offer voice services, including local, domestic and international calls, roaming services and prepaid and postpaid.
The firms provide value-added services, such as the IoT, comprising logistics and fleet management and automotive and health solutions. They also offer content streaming, interactive applications, wireless security services and mobile payment solutions. Some industry players sell mobile handsets and accessories through dealer networks and offer co-billing services to other telecommunications service providers. The firms provide IT solutions, cable and satellite pay television subscriptions, as well as data services and hosting services to residential and corporate clients.
What's Shaping the Future of Wireless Non-US Industry?
Network Optimization: The convergence of network technologies requires considerable investments from traditional carriers (telecom and cable) and cloud service providers. With the exponential growth of mobile broadband traffic and home Internet solutions, user demand for coverage speed and quality has increased manifold. This has resulted in a massive demand for advanced networking architecture, forcing service providers to upgrade their networks to support the surge in home data traffic.
The industry participants continue investing in networks to increase coverage and implement new technologies to optimize network capabilities. Further, there is a continuous need for network tuning and optimization to maintain superior performance standards, creating demand for state-of-the-art wireless products and services. Moreover, telecom services show a weak correlation to macroeconomic factors as these are considered necessities. This has led the carriers to focus more on network upgrades to cater to evolving customer needs.
Margins Dented: Although supply chain woes have declined progressively, the industry is facing a dearth of chips, which are the building blocks of various equipment used by telecom carriers. Moreover, high raw material prices due to the Israel-Hamas conflict, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms.
The demand-supply imbalance has crippled operations and affected profitability due to inflated equipment prices. Wireless operators have been facing challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results.
Holistic Growth Focus: While delivering mission-critical communication services, the industry firms are undertaking decisive steps to accelerate subscriber additions and improve churn management. The companies aim to extend their geographical footprint by developing existing businesses and strategic acquisitions while offering superior network connectivity.
Wireless carriers are also adopting various unlimited plans to enhance average revenue per user. They are focusing on increasing handset connections and customer loyalty to boost revenues and profitability. Furthermore, the industry participants are taking a holistic approach to content delivery. They are offering various pathways for delivering services through a combination of network-based video transcoding and compression technologies to provide IP video formats, live TV and streaming services.
Zacks Industry Rank Indicates Bullish Trends
The Zacks Wireless Non-US industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #22, which places it in the top 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few non-US wireless stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Wireless Non-US industry has lagged the broader Zacks Computer and Technology sector and the S&P 500 composite in the past year.
The industry has lost 5.2% over this period against the S&P 500’s and sector’s rise of 23.7% and 29.8%, respectively.
Industry's Current Valuation
The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is commonly used for valuing wireless stocks. The industry currently has a trailing 12-month EV/EBITDA of 2.95X compared with the S&P 500’s 18.61X. It is also trading below the sector’s trailing 12-month EV/EBITDA of 17.75X.
Over the past five years, the industry has traded as high as 9.08X and as low as 1.25X, with a median of 4.49X.
3 Non-US Wireless Stocks to Buy
Orange: Headquartered in Paris, Orange is one of the world’s leading telecommunications carriers with a presence in 26 countries. The company is also a leading provider of global IT and telecommunication services to multinational firms under the brand Orange Business Services.
The company is focusing on the “Lead the future” plan, which aims to capitalize on network excellence to reinforce its leadership in service quality. The stock has a VGM Score of B. It has gained 2.4% in the past year and has a long-term earnings growth expectation of 13.7%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SK Telecom: Headquartered in Seoul, the company provides wireless telecommunication services in South Korea and globally. Together with its affiliates, it operates diverse Information and Communications Technology (“ICT”) businesses. With capabilities in 5G, artificial intelligence (AI), Big Data analysis and quantum cryptography communications, SK Telecom is strengthening its position as a global ICT leader.
It has embarked on the 'AI Pyramid Strategy' to accelerate innovation centered around three key areas — AI Infrastructure, AI Transformation and AI Service. It has a long-term earnings growth expectation of 3.5% and a VGM Score of A. It has gained 17.4% in the past year. SK Telecom currently sports a Zacks Rank #1.
KT Corp: Headquartered in Seongnam, South Korea, the company is the largest integrated telecom and digital platform service provider in the Southeast Asian country. It offers mobile, broadband, B2B communications and fixed-line telephony, with an industry-leading market presence in broadband and fixed-line services. KT Corp offers a plethora of digital transformation services and boasts a well-balanced portfolio of diverse subsidiaries focusing on media/content, financial services, real estate developments and commerce industries.
KT is leading the fourth industrial revolution with high-speed wireless networks and new ICT technology. It is increasingly focusing on digital health, AI, Big Data, cloud and robotics as its next leading businesses. This Zacks Rank #1 stock has gained 29.6% in the past year. The company has a long-term earnings growth expectation of 11.3%, with a VGM Score of A.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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800-767-3771 ext. 9339
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Zacks Investment Research
Orange S.A. ORAN recently finished the primary phase of a new data center and communications infrastructure project with Grifols Egypt for the latter’s Plasma Derivatives (“GEPD”) facility.
GEPD is a joint effort between Egypt's National Service Projects Organization (“NSPO”) and Grifols, a global healthcare company specializing in plasma-based treatments. Both NSPO and Grifols are spearheading this project to modernize the healthcare landscape in Egypt by providing a sustainable supply of essential therapeutics for life-threatening conditions.
Orange, the enterprise division of the Orange Group, is playing a pivotal role in the success of this project by developing the data center and communications infrastructure for GEPD's facility in the Medical City, within Egypt's New Administrative Capital. The company is leveraging its extensive knowledge of Egypt's regulatory landscape and technical and system integration expertise to deliver a comprehensive solution.
The alliance will involve the delivery of co-location services through the Administrative Capital for Urban Development’s (“ACUD”) commercial and telco data center. The ACUD data center is one of the most advanced facilities in the region, boasting cutting-edge technology and infrastructure designed to meet the growing needs of businesses in Egypt. ACUD, backed by Orange, will aid in the equipment procurement process and offer professional services during the project’s build-up and operational stages, ensuring that the center is equipped to handle the complex technological demands of modern healthcare.
Collaborations Driving ORAN’s Growth
Strategic partnerships remain at the forefront for Orange as it strives to boost its top line and sustain long-term growth. In June 2024, Orange teamed up with Georgia-based mobile network provider - Skillnet - under the Orange Alliance program. The partnership was undertaken to augment Silknet’s capabilities in the B2C, B2B and ICT sectors with the use of ORAN’s expertise and innovative offerings.
In May 2024, ORAN strengthened its long-running alliance with Nokia Corporation to transform network programmability and generate monetization opportunities. By using Nokia’s platform, Orange aims to engage the global developer ecosystem and unleash advanced 5G network features, such as dynamic bandwidth allocation, real-time location insights, predictive maintenance and event-driven security responses. In April 2024, ORAN extended its partnership with Google Cloud to expand the reach of artificial intelligence (AI) and GenAI across geographies and core customers by implementing the technologies near Orange’s and its customers’ operations.
In the second quarter of 2024, ORAN’s revenues grew 0.9% year over year to €9.9 million, driven by solid momentum in retail services amid a marginal decrease in wholesale services. Africa & Middle East and France posted healthy top-line growth of 10.3% and 0.3%, respectively, year over year, amid a fall of 2.2% in the European region. The expansion in the top line is likely to boost the stock.
Based in France, ORAN is one of the leading telecommunications operators, empowering consumers, businesses and other telecommunications operators globally with its modern connectivity, cloud and cybersecurity expertise. With more than 30,000 business-to-business customers globally, the company is continuously innovating to meet the changing needs of enterprises in a rapidly evolving digital landscape.
ORAN’s Zacks Rank & Stock Price Movement
At present, ORAN carries a Zacks Rank #2 (Buy). Shares of the company have gained 2.2% against the sub-industry’s decline of 4.2% in the past year.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Arista Networks, Inc. ANET, Harmonic Inc. HLIT and Ubiquiti Inc. UI. UI and HLIT presently sport a Zacks Rank #1 (Strong Buy), whereas ANET carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks supplies products to a prestigious set of customers, including Fortune 500 global companies in markets like cloud titans, enterprises, financials and specialty cloud service providers. It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, Arista pulled off an earnings surprise of 8.25%.
Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. HLIT delivered a trailing four-quarter average earnings surprise of 32.5%.
Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
Zacks Investment Research
The Zacks Wireless Non-US industry appears well poised to benefit from healthy demand trends stemming from the increasing user propensity to stay connected in this digital age. However, high capital expenditures for infrastructure upgrades, margin erosion, supply-chain disruptions due to geopolitical conflicts and high customer inventory levels have dented the industry’s profitability.
Nevertheless, Orange S.A. ORAN, SK Telecom Co., Ltd. SKM and KT Corporation KT are likely to gain from significant long-term growth opportunities across the industry and rising demand for scalable infrastructure for seamless wireless and fiber connectivity, with the wide proliferation of IoT and accelerated 5G deployment.
Industry Description
The Zacks Wireless Non-US industry comprises mobile telecommunications and broadband service providers based on foreign shores. These companies primarily offer voice services, including local, domestic and international calls, roaming services and prepaid and postpaid. The firms provide value-added services, such as the IoT, comprising logistics and fleet management and automotive and health solutions. They also offer content streaming, interactive applications, wireless security services and mobile payment solutions. Some industry players sell mobile handsets and accessories through dealer networks and offer co-billing services to other telecommunications service providers. The firms provide IT solutions, cable and satellite pay television subscriptions, as well as data services and hosting services to residential and corporate clients.
What's Shaping the Future of Wireless Non-US Industry?
Network Optimization: The convergence of network technologies requires considerable investments from traditional carriers (telecom and cable) and cloud service providers. With the exponential growth of mobile broadband traffic and home Internet solutions, user demand for coverage speed and quality has increased manifold. This has resulted in a massive demand for advanced networking architecture, forcing service providers to upgrade their networks to support the surge in home data traffic. The industry participants continue investing in networks to increase coverage and implement new technologies to optimize network capabilities. Further, there is a continuous need for network tuning and optimization to maintain superior performance standards, creating demand for state-of-the-art wireless products and services. Moreover, telecom services show a weak correlation to macroeconomic factors as these are considered necessities. This has led the carriers to focus more on network upgrades to cater to evolving customer needs.
Margins Dented: Although supply chain woes have declined progressively, the industry is facing a dearth of chips, which are the building blocks of various equipment used by telecom carriers. Moreover, high raw material prices due to the Israel-Hamas conflict, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. The demand-supply imbalance has crippled operations and affected profitability due to inflated equipment prices. Wireless operators have been facing challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results.
Holistic Growth Focus: While delivering mission-critical communication services, the industry firms are undertaking decisive steps to accelerate subscriber additions and improve churn management. The companies aim to extend their geographical footprint by developing existing businesses and strategic acquisitions while offering superior network connectivity. Wireless carriers are also adopting various unlimited plans to enhance average revenue per user. They are focusing on increasing handset connections and customer loyalty to boost revenues and profitability. Furthermore, the industry participants are taking a holistic approach to content delivery. They are offering various pathways for delivering services through a combination of network-based video transcoding and compression technologies to provide IP video formats, live TV and streaming services.
Zacks Industry Rank Indicates Bullish Trends
The Zacks Wireless Non-US industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #22, which places it in the top 9% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few non-US wireless stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Wireless Non-US industry has lagged the broader Zacks Computer and Technology sector and the S&P 500 composite in the past year.
The industry has lost 5.2% over this period against the S&P 500’s and sector’s rise of 23.7% and 29.8%, respectively.
One-Year Price Performance
Industry's Current Valuation
The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is commonly used for valuing wireless stocks. The industry currently has a trailing 12-month EV/EBITDA of 2.95X compared with the S&P 500’s 18.61X. It is also trading below the sector’s trailing 12-month EV/EBITDA of 17.75X.
Over the past five years, the industry has traded as high as 9.08X and as low as 1.25X, with a median of 4.49X, as the chart below shows.
Enterprise Value-to-EBITDA Ratio (Past Five Years)
3 Non-US Wireless Stocks to Buy
Orange: Headquartered in Paris, Orange is one of the world’s leading telecommunications carriers with a presence in 26 countries. The company is also a leading provider of global IT and telecommunication services to multinational firms under the brand Orange Business Services. The company is focusing on “Lead the future” plan, which aims to capitalize on network excellence to reinforce its leadership in service quality. The stock has a VGM Score of B. It has gained 2.4% in the past year and has a long-term earnings growth expectation of 13.7%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: ORAN
SK Telecom: Headquartered in Seoul, the company provides wireless telecommunication services in South Korea and globally. Together with its affiliates, it operates diverse Information and Communications Technology (“ICT”) businesses. With capabilities in 5G, artificial intelligence (AI), Big Data analysis and quantum cryptography communications, SK Telecom is strengthening its position as a global ICT leader. It has embarked on the 'AI Pyramid Strategy' to accelerate innovation centered around three key areas — AI Infrastructure, AI Transformation and AI Service. It has a long-term earnings growth expectation of 3.5% and a VGM Score of A. It has gained 17.4% in the past year. SK Telecom currently sports a Zacks Rank #1.
Price and Consensus: SKM
KT Corp: Headquartered in Seongnam, South Korea, the company is the largest integrated telecom and digital platform service provider in the Southeast Asian country. It offers mobile, broadband, B2B communications and fixed-line telephony, with an industry-leading market presence in broadband and fixed-line services. KT Corp offers a plethora of digital transformation services and boasts a well-balanced portfolio of diverse subsidiaries focusing on media/content, financial services, real estate developments and commerce industries. KT is leading the fourth industrial revolution with high-speed wireless networks and new ICT technology. It is increasingly focusing on digital health, AI, Big Data, cloud and robotics as its next leading businesses. This Zacks Rank #1 stock has gained 29.6% in the past year. The company has a long-term earnings growth expectation of 11.3%, with a VGM Score of A.
Price and Consensus: KT
Zacks Investment Research
Investors might want to bet on SK Telecom (SKM), as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
Since a changing earnings picture is a powerful factor influencing near-term stock price movements, the Zacks rating system is very useful for individual investors. They may find it difficult to make decisions based on rating upgrades by Wall Street analysts, as these are mostly driven by subjective factors that are hard to see and measure in real time.
As such, the Zacks rating upgrade for SK Telecom is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For SK Telecom, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Estimate Revisions for SK Telecom
This telecommunications company is expected to earn $2.29 per share for the fiscal year ending December 2024, which represents a year-over-year change of 8.5%.
Analysts have been steadily raising their estimates for SK Telecom. Over the past three months, the Zacks Consensus Estimate for the company has increased 7.5%.
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its entire universe of more than 4000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a 'Strong Buy' rating and the next 15% get a 'Buy' rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
The upgrade of SK Telecom to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Zacks Investment Research
KT Corp. (KT) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
Therefore, the Zacks rating upgrade for KT Corp. basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For KT Corp. rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate Revisions
As empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Estimate Revisions for KT Corp.
For the fiscal year ending December 2024, this telecommunications services provider is expected to earn $1.86 per share, which is a change of 20% from the year-ago reported number.
Analysts have been steadily raising their estimates for KT Corp. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.9%.
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its entire universe of more than 4000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a 'Strong Buy' rating and the next 15% get a 'Buy' rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
The upgrade of KT Corp. to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Zacks Investment Research
By Dominic Chopping
STOCKHOLM--Ericsson will join forces with a group of global telecom operators as they work to make it easier to develop new digital services.
The Swedish telecom-equipment company said Thursday that the deal will see the formation of a new company to accelerate adoption and innovation of network APIs--the interfaces that enable applications and mobile networks to communicate with each other and allow developers to build software applications.
By combining network APIs globally, the new company aims to ensure that new applications will work anywhere and on any network, which will drive new monetization opportunities, Ericsson said.
Niklas Heuveldop, chief executive of Ericsson's Vonage cloud-communications subsidiary, said that developers will benefit from accessing advanced network capabilities in partner networks through common APIs, accelerating the digital transformation of businesses and the public sector.
"This groundbreaking, open industry collaboration effectively removes the single largest barrier for developers to leverage mobile networks to their full potential," he said.
Ericsson said that by making advanced network capabilities easily accessible it will open up a new wave of app development and allow developers to create new use cases across many sectors.
Companies committing to the deal include America Movil, AT&T, Bharti Airtel, Deutsche Telekom, Orange, Reliance Jio, Singtel, Telefonica, Telstra, T-Mobile, Verizon and Vodafone, but additional telecom operators are encouraged to join, it said.
Upon closing, which is expected in early 2025, Ericsson will hold 50% of the equity in the venture while the telecom providers will hold 50% in total.
Write to Dominic Chopping at dominic.chopping@wsj.com
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