AT&T Enters the TV Market: How Big Is the Prize?

AT&T (T) reported results last week that indicated strong performance in the company's TV business. AT&T's fiber optic TV service called U-Verse has added more subscribers so far than expected.

By offering competitive TV-internet-phone ("triple play") bundles AT&T has drawn customers away from cable and satellite providers. We expect U-Verse TV Subscribers to be 2 million subscribers by the end of 2009 and over 6 million by the end of the Trefis forecast period. In comparison, cable operators Comcast (CMCSA) and Time Warner (TWX) currently have about 24 million and 15 million subscribers respectively. The strength of AT&T U-Verse subscriber growth is particularly worrisome for satellite TV providers DirecTV (18 million subscribers) and Dish Network (14 million subscribers) which are not able to offer their customers triple play bundles.

If AT&T's subscriber count were to increase to 14 million (comparable to Dish (DISH)) over the next few years, there could be $30+ billion of additional upside to AT&T's market cap. We have a Trefis price estimate of about $33 AT&T, representing significant up side to AT&T's current price of $26 based in part on our belief that AT&T's TV subscriber wins will continue.

Comments

[jarco:]

The down side for AT&T, Verizon, et al is the plus for Satellite; namely, MLB and NFL for which Direct TV has exclusive national broadcast rights.

With tsunami like abandonment of wire line in favor of Cell phone only, triple bundling has little merit and favors satellite, especially Direct.

Oct 29 11:49 AM

[spsarge:]

Although I am bombarded with the advertisements and enticements, I tried to sign up, and after 2 visits found out my house is too far from the hub it uses... even though I can see it across the street! Even the technician said to me that they need to put more money into infrastructure. Just because their website indicates you can get it when you put your number/location in, you may still have too much cable between you and the hub.

Oct 29 02:33 PM

[User 363011:]

I get my Satellite TV from Dish - I only have HDTVs so I subscribe for BronzeHD $45 Month
Internet from Comcast $59 so total $104 non promotional price

ATT U-Verse same service $123 promotional for first 6 months

Oct 29 03:28 PM

[JAMES CARLINI:]

AT&T should have focused on bringing fiber-to-the-premise(F... instead of the stop gap approach of U-verse. What is 30Mbps if you can get 100Mbps on fiber and go to 1Gbps on fiber in the short-term?

Plus, copper (the final piece of media to the doorstep) must be "pristine" which it may be in a lab, but NOT in the street.

Verizon had a better business model (looking at FTTP as the long-term strategy) and that is now starting to show.

Oct 29 04:29 PM

[JAMES CARLINI:]

that is FTTP (Fiber to the Premise) above

Oct 29 04:30 PM

[Robert Mc C...:]

I have Comcast 3 way, Phone,HS enternet, TV 900 channels with box conversion with all HD at $201 per month, Looking for better price all the time.

Oct 29 04:31 PM

[User 485660:]

I recently got ATT Uverse... and I was very disappointed that it didn't come with NBATV... but what I did like was I could shut off my home phone, which was one less bill for me, since I have a cell phone.

Oct 29 08:17 PM

[directcommu...:]

i think cable and phone companies will slowly put the sat carriers on a slow down. who wants an ugly dish on the house anyway

Nov 08 03:50 PM