A Foolish Week of Telecom


There was plenty of news across the dividend space this week, so let's get right to the top story lines.

Dividend alert
That favorite telecom dividend payer, Frontier Communications (NAS: FTR) , got some bad news. Standard & Poor's Ratings Services hacked the telecom's credit rating down to negative from stable. This included dropping Frontier to BB, two steps below investment grade.

The company finds itself in a damned-if-you-do, damned-if-you-don't situation. S&P said the company's generous dividend makes it harder to reduce its debt. But if it stops paying a dividend or reduces it drastically to lower that debt, there will be an even bigger investor evacuation than it's already seen lately. The price of the stock has fallen 32% in the last three months.

Apple shines even brighter
If Apple's (NAS: AAPL) monster first-quarter earnings report ($46 billion in revenue) wasn't enough earlier this week, then it can report that it has bested its rival smartphone maker, Samsung, in two other areas. First, a German court found for Apple in a patent-infringement case brought by Samsung against Apple. And, second, Apple has pulled ahead of Samsung as the fourth-quarter leader in smartphone sales. This just underscores the pull of the iPhone. Samsung was the sales leader in smartphones for the full year, but when the iPhone 4S went on sale, Apple shot ahead as all those waiting for its release finally bought.

Will one head be better than two?
Research in Motion
(NAS: RIMM) announced that Thorsten Heins will become its new CEO. He will take over from the company's unusual two-person leadership setup of co-chairmen and CEOs Mike Lazaridis and Jim Balsillie. Heins was the company's COO for product engineering.

Lazaridis said in a statement, "I am so confident in RIM's future that I intend to purchase an additional $50 million of the company's shares, as permitted, in the open market." The price for RIM stock has dropped almost 75% since the beginning of 2011.

Clearwire's good news
(NAS: CLWR) doubled its revenue in the fourth quarter, beating market estimates. However, the rate at which it added new customers halved. It added 900,000 customers this quarter compared to 1.86 million in the third quarter. The company also said this week that it plans to go further into debt, $300 million worth.

A wireless transfer
(NYS: T) and T-Mobile took the first step toward the transfer of $1 billion worth of wireless spectrum from AT&T to T-Mobile, formally filing the request to do so with the FCC. This spectrum is part of the penalty AT&T must pay to T-Mobile for the failure of their merger to go through. A T-Mobile executive said, "We hope the FCC will move swiftly to approve the license assignments."

And Speaking of the FCC
AT&T Chairman and CEO Randall Stephenson wasted no time during his company's earnings conference call to press and re-press his desire for the FCC to have no say on who does and does not get to bid on any upcoming wireless spectrum auctions.

What's at stake are some unused broadcast spectrum licenses that Congress is contemplating auctioning off. Stephenson, whose favorite topic is how AT&T will not survive without more spectrum and how "it appears the FCC is intent on picking winners and losers rather than letting [the] markets work," has even made it a little personal. "I think the chairman made a speech the week after the holidays -- the chairman of the FCC -- where he said he needed the rules [of the spectrum auctions] to be fluid. My interpretation is, these rules are so fluid, you can drink out of them with a straw right now."

On that note, until next week.

If you're looking for one company on the forefront of the mobile revolution, The Motley Fool has a just released free report on mobile named "The Next Trillion-Dollar Revolution" that details a "hidden" component play inside mobile phones that also is a market leader in the exploding Chinese market that Intel praised for leading it to success last quarter. Hundreds of thousands have requested access to previous reports, but you can be among the first to access this just-released report -- and it's free.

At the time thisarticle was published Fool contributorDan Radovskyowns shares of AT&T and Frontier Communications. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.