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Why AT&T Should Get Better

August 21, 2014 | About:
sandyinvestment

sandyinvestment

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AT&T (T) has become the leading service provider in 4G LTE, WIFI, high speed internet, TV and voice and cloud based services. Strong wireless growth, intro of U-Verse TV service and strategic business services, helped AT&T to achieve the best consolidated growth of 3.6% in two years, which indeed is a great achievement. It also exceeded the analysts' expectations of $0.70 per share on expected revenue of $32.44 billion to $0.71 per share on $32.44 billion, in the first quarter of this year. The blue chip company managed to add over 1 million subscribers to its ever-increasing database and is now moving toward a perpetual presence in the growing sectors.

The company has many plans for the future and is diversifying itself in the  TV and Mobile sectors with DirecTV acquisition and Amazon Fire mobile phone, which has enabled the earning estimates to rise up to 5.64% this year.

The Fire

AT&T has won exclusive rights for the new smartphone to be named “Fire Phone”, introduced by the E-Commerce giant Amazon. With Amazon entering into the cellular market with AT&T, the stakes seem very high. Similar to what Apple and AT&T did in 2006, when a deal to was made to sell iPhone exclusively with AT&T that totally transformed the blue chip company, AT&T aims to expand its subscriber base through this FIRE phone.

Diversification

Merging with the #1 American satellite TV service provider will move the meter up for the paytv sector. As the cable companies remain to float in deadly black sky of Satellites, the consumers will now be able to enjoy satellite TV along with high speed internet at lower prices. The company aims to provide an all-In-one experience to their valuable customers by uniting wireless, wire line, broadband and TV sectors under one ownership. AT&T is trying to become bigger and more prominent in the telecommunication field by expanding itself in the TV business. One should not forget that AT&T is already into TV, through U-Verse, offering about 5 million subscribers. So its aiming to add the large 38 million subscriber database of DirecTV through this deal. This $48.5 billion deal expects to deliver the best experience for consumers and enterprise consumers. According to the sources, DirecTV shareholders will receive $95 per share, part cash and part stock. Alongside, AT&T also approved to pay off DirecTV's debt of about $19 billion as per the deal. Moreover, DirecTV has an exclusive contract with the NFL to air all games that ends in 2014, serving as a complimentry dessert after the main course. Therefore, by combining forces of TV, Internet, Satellite Streaming and Wireless, AT&T believes it can use economies of scale to achieve tremendous growth.

The 3P plan

The far-reaching company offers its wide-ranging services to its enormous customers around the globe, hence it’s necessary for it to remain loyal and to satisfy its customers. For the same, it is trying to win hearts of the people by inviting them to learn about the company’s community activities. Their new plan – People | Planet | Possibilities – aims in engaging the people with the company’s activities to improve the community in which we live and work. Disaster Response, employee volunteerism, by mentoring academy and regular sustainability reports, enhance CSR activities. Also, the company is trying to make the buying process open and transparent for its valuable customers and shareholders. It is also offering greater choices of plans and tailor-made packages to the customers according to their needs. With an aim of working for the people, the company has had a tremendous impact as it added 600,000 postpaid subscribers and above 255,000 prepaid subscribers in the last quarter, overall about 4.5 million prepaid subscribers being added with 70% of them being smartphone users.

More growth plans

The blue chip company’s mobile share accounts and connections rose 50% in the last quarter, as the company continues to expand its wireless and fiber optic network across the boundaries with a good infrastructure. It announced its expansion of 21 new markets of their ultra-fast networks. Recently, it also spent $1 million each on Greater Los Angeles, Phoenix and New Jersey to enhance the local networks. It is also planning to install a new telecommunication facility in West Oahu, to improve the wireless carrier’s mobile communication services in that region which will be a 900-square-foot facility located on 108-acre parcel. The company’s strong cash flow allowed it to invest in various projects like Project VIP, on which $14 billion will be spent over a period of 3 years that will focus on wireless and a wire line initiative that will grow its business, revenue and reach. The company also announced Amdocs and Jumper Networks as their primary vendors for modern cloud based architecture.

AT&T’s acquisition of prepaid wireless provider Leap Wireless International Inc. proved to be a great step for the company’s progress. Leap wireless operates under the Cricket brand, which now will be integrated with AT&T and will be called the New Cricket and will have access to AT&T’s superfast 4G LTE network. The Leap wireless was acquired for $15 per share in cash by AT&T, which covers about 280 million people. Along with the cricket acquisition, AT&T also acquired spectrum in PCS and AWS bands covering nearly 138 million people, thus making it bigger and better.

Conclusion

AT&T’s $48.5 million deal with the DirecTV will give a boost to the company’s TV sector (U-Verse) and will also pool in millions of customers to have an all-in-one experience which is the future of the wireless and streaming TV field. The Leap acquisition will also help in expanding the customer database along with the global reach of 4G LTE Network. AT&T’s deal with the e-commerce giant- Amazon’s Fire Phone and the new-gen deal of LG G watch will help the company to expand itself through them into mobile and wireless sector. AT&T’s quarterly payout has increased consistently since 3 decades and it has a record of providing continuous dividends to its shareholders consecutively for 30 years which makes it one of the most reliable income-generating stock. It is also winning the hearts of the people through its next-level CSR approach of People|Planet|Possibilities, by creating a win-win situation for both; its valuable customers and the company itself.


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