The big argument that AT&T (T) bears have made is the lack of 4G LTE network the company had in place. The investors who have shunned T in favor of other wireless carriers for this reason have some news to consider now.
Here is the latest Seeking Alpha Market Current:
"2:44 PM Ahead of the iPhone 5's launch, AT&T (T) announces it has extended 4G LTE coverage to 7 new markets; has expanded coverage in 2 markets; and plans to bring coverage to 47 other markets by year's end. Its PR department worked overtime to spread the news. Analysts have argued Verizon's (VZ, VOD) LTE coverage edge will allow it to take share from AT&T and Sprint (S) following the launch of the next iPhone, which is widely expected to support LTE."
Obviously, the analysts have something else to chew on.
That news was on the heels of this news:
"4:24 AM Bloomberg provides a summary of the spectrum purchases that AT&T (T) is involved with as it seeks to catch up with Verizon (VZ) and cope with the increasing amount of data subscribers are downloading. AT&T is putting together deals worth $2.6B, having proposed 24 transactions in the previous four months alone."
The fact of the matter is that AT&T is closing in on Verizon in this area rather quickly. As noted in this article:
"In addition to keeping up with Verizon, AT&T's buying spree is an effort to relieve pressure on its network as data traffic from smartphones and tablets taxes its wireless coverage, said Chris King, an analyst with Stifel Nicolaus & Co. in Baltimore. Acquiring more government licenses to use spectrum gives companies greater capacity on their networks to handle demand."
This is telling me that demand is growing and AT&T is responding, rather forcefully given the latest news. If demand is growing, and AT&T is responding, then I believe the price of this stock will continue to rise and the dividends that they pay will continue to grow.
"AT&T is working to unlock unutilized spectrum for mobile Internet usage and adding capacity to keep pace with skyrocketing consumer demand," said Brad Burns, an AT&T spokesman in Dallas. Mark Wigfield, an FCC spokesman, declined to comment."
My Stock Pick For 2012
I stuck my neck out late last year in this article. Shares of AT&T were selling for around $28 and the T-Mobile deal had not fallen through yet. When that disaster hit, folks scoffed at my continual insistence that AT&T would overcome anything and everything that stood in its way. Let's take a look at the facts.
An increase of about 30% in the share price and significant increases in earnings, earnings per share, and profit margins. Key metrics to be sure, but all has not been rosy. Revenues declined over the same period, and debt has increased to around $64 billion as of 6/30/2012.
That being said, AT&T bumped up its dividend a bit for 2012, and bought back $4 billion in its share repurchase plan in the last 6 months. A balancing act to be sure, but one that T seems to be winning for shareholders.
So, What's Next?
Do I really need to remind everyone that the Apple (AAPL) launch of the iPhone 5 is upon us? I think every Apple shareholder is drooling at the share price prospects of Apple in the coming weeks.
As for me, I am just thinking about the share price of AT&T in the coming weeks. Perhaps $40 was too conservative?
Disclosure: I am long T.