AT&T: U-verse TV Isn't Driving Value

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Includes: CHTR, CMCSA, DISH, T, VZ
by: Trefis

AT&T (NYSE:T) offers fiber-optic based Internet & TV network service under the brand U-verse. It competes with Verizon (NYSE:VZ), Dish Network (NASDAQ:DISH), Comcast (NASDAQ:CMCSA), Time Warner Cable (TWC) and DirecTV (DTV) in the pay TV market. We currently have a Trefis price estimate of around $38 for AT&T’s stock, about 41% above the current market price of around $27.

Trefis members have created forecasts for two key drivers of AT&T’s stock over the last week: (1) U-Verse TV Pricing and (2) U-Verse TV Subscribers. The Trefis members’ forecasts imply very little impact to Trefis price estimate for AT&T’s stock.

AT&T’s stock is quite sensitive to (1) U-Verse TV Pricing and (2) U-Verse TV Subscribers. Below are charts showing recent estimates for the two drivers in detail.

1. U-Verse TV Pricing

The average of forecasts for U-Verse TV Pricing created by Trefis members indicated a projected increase from $60.50 per month in 2010 to $64.10 per month by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from $60.20 per month in 2010 to $62.60 per month by the end of the Trefis forecast period. The member estimates imply little upside to the Trefis price estimate for AT&T’s stock. In the past, U-Verse TV Pricing has increased from $59 per month in 2006 to $60.20 per month in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of AT&T’s stock to U-Verse TV Pricing.

2. U-Verse TV Subscribers

The average of forecasts for U-Verse TV Subscribers created by Trefis members indicated a projected increase from 2.7 million in 2010 to 8.4 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 3 million in 2010 to 9.2 million by the end of the Trefis forecast period. The member estimates imply a downside of 1% to the Trefis price estimate for AT&T’s stock. In the past, U-Verse TV Subscribers has increased from 0.2 million in 2007 to 2.1 million in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of AT&T’s stock to U-Verse TV Subscribers.

Disclosure: No positions