39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Yesterday, 3:13 PM
- AT&T (NYSE:T) is off the Sell list at HSBC, though the firm suggests multiple risks still exist.
- But shares have fallen far enough that valuation supports a Neutral stance, argues analyst Sunil Rajgopal. he has a price target of $38; AT&T shares are off fractionally today to $41.25.
- The company's subscriber additions will face pressure from iPhone 7 churn along with new aggressive promotions from smaller competitors Sprint and T-Mobile, he writes. "Drawing from early readings on iPhone 7 sales from operators and subscriber momentum we expect improvement in subscriber gains at Sprint and a continuation of commercial momentum at T-Mobile."
- But the firm's price target "implies an EV/EBITDA multiple of 6.6x (on [estimated] FY2017 EBITDA) versus current trading multiple of 6.7x 2017e EBITDA; this compared to 6-7x for US peers and 5-8x for European peer group."
- Meanwhile, Barclays reiterated its Buy rating today, along with a price target of $45, implying about 9% upside.
Fri, Sep. 23, 12:36 PM
- Argentina's government expects upcoming telecom reforms to draw $20B in investment over four years, with a number of multinational players making preparations for the shifting market.
- A strategy of openness pledged by recently elected president Mauricio Macri is causing investment rethinking across industries. AT&T (NYSE:T) and Motorola Mobility have expressed interest in investing there, Communications Minister Oscar Aguad told Reuters.
- "As long as we are able to dictate a norm with clear rules, I think the figure of $5 billion a year is possible," Aguad says of the regulations set to take effect in 2018.
- In local firms, Telecom Argentina (TEO -0.5%) has said it plans to invest $2.6B through 2018, and Telefonica Argentina (TEF -0.5%) has invested $330M in the first six months of this year. Those firms run at a disadvantage in the TV market to Groupo Clarin's Cablevisión, which offers Internet and TV via fiber, and its cable peers (and also compete with satellite distributors like DirecTV and Supercanal).
Fri, Sep. 23, 11:50 AM
- AT&T (T -0.2%) is settling an FCC investigation for just $450,000.
- The probe looked into AT&T's operation of a number of fixed wireless stations around the United States in variance with its licenses over a four-year period.
- The company says it found "minor discrepancies" and that "none of them had any impact on consumers or other carriers."
- Along with the fine, first proposed by the FCC in January 2015, AT&T promises not to engage in repeat behavior.
Thu, Sep. 22, 6:53 PM
- Add to the rack of retransmission deals that AT&T's (T +1.3%) striking with content creators one with Scripps Networks Interactive (SNI +2.8%), the TV home of HGTV, Food Network, DIY, Cooking Channel, Travel Channel and more.
- As with the spate of recent deals the wireless giant has been setting, it not only extends distribution on DirecTV (and U-verse) for several years, but covers the expanded digital rights that include the networks on upcoming DirecTV streaming services (particularly DirecTV Now).
- DirecTV Now launches in Q4 with more than 100 channels and what AT&T chief Randall Stephenson calls a "very, very aggressive price point" and data-cap exemptions for AT&T wireless subscribers.
Thu, Sep. 22, 1:46 PM
- AT&T (T +1.5%) is keeping up a string of channel-carriage deals ahead of its rollout of streaming DirecTV service, signing Starz (STRZA +0.6%) to a new distribution deal that includes joining DirecTV Now.
- Part of the deal includes AT&T taking an equity stake in Starz merger partner Lions Gate Entertainment (LGF +0.7%) -- who, when its own definitive deal is done, will pay AT&T three annual installments of $16.67M in stock or cash.
- Lions Gate has signed a multi-year deal with AT&T covering transactional video on demand, pay-per-view, and electronic sell-through.
- FBR's Barton Crockett says Starz gave AT&T a "big double-digit step-down" to renew the deal in a "jarring outlier." That's expected to be offset for Starz by over-the-top revenues.
- AT&T's recent deals: Discovery, Disney, NBCUniversal, Turner
Thu, Sep. 22, 11:31 AM
- The move to unlimited data service is the beginning of a "radical simplification" of the offer at T-Mobile (TMUS +0.5%), Chief Operating Officer Mike Sievert tells the Goldman Sachs Communacopia Conference.
- And still a differentiator, despite the resurgence of unlimited plans, he says: "At Verizon (VZ +0.4%), they're sticking somewhere between 'No' and 'Hell No' on unlimited."
- T-Mobile One, the company's recently announced "Un-carrier" move doing away with data buckets, is essentially a "monthly subscription to the Internet," and that has cost-cutting implications for them. "A third of our calls into our [customer care] centers are about the bill ... What if there was no bill? Because everybody has one simple monthly subscription and they've gone ahead and put it on autopay?" Autopay is on 20% of plans, CFO Braxton Carter says, and the company hopes to double that.
- Sievert contrasted the company's focus vs. larger, "convergence"-oriented rivals like AT&T (T +0.8%): "They're moving on; they're talking about other things, it's DirecTV, it's Mexico."
- Earlier at the conference, AT&T said it would zero-rate streaming service DirecTV Now and aggressively price it. "They must be overcome with jealousy about how [Verizon's] Go90's going!" Sievert laughs. "I'm here to tell you: We'll zero-rate DirecTV Now on T-Mobile, happy to pre-announce that."
Wed, Sep. 21, 11:00 AM
- AT&T's (T +0.8%) direct-to-consumer streaming offering, DirecTV Now, is targeting a "very, very aggressive price point" with more than 100 channels -- and that viewing will be exempt from data caps for AT&T wireless subscribers.
- That move ("zero-rating" video content) is one of the ways many observers expected the company to take advantage of its DirecTV acquisition to boost its wireless business.
- CEO Randall Stephenson discussed the rollout, coming in "a couple of months," at Goldman Sachs' Communacopia conference this morning. Of the platforms on which DirecTV Now will be available (Smart TVs and PCs, but also smartphones and tablets) he noted mobile's increasing importance, particularly for apartment dwellers who are more likely to use mobile devices than sign up for pay TV subscriptions.
- “The platform the NFL Sunday ticket rides on is an AT&T platform,” Stephenson said. “Last week, if you looked at the number of people streaming the NFL Sunday Ticket, just week over week it was up 60%, which is a stunning number."
- Meanwhile, the company today said it was planning to expand its cross-screen addressable ad offering in Q4. Advertisers will have the ability to serve audiences with precision across nearly 14M addressable TV households, and 30M mobile devices associated with those homes. That will include ad inventory in the DirecTV mobile app.
Wed, Sep. 21, 4:15 AM
- AT&T (NYSE:T) has discovered a way to deliver high-speed broadband over electrical power lines, a method it claims would make it cheaper and easier to bring internet to hard-to-reach places.
- The company has filed patents for the technology and is looking for a place to conduct field trials next year.
- Even if it goes well, AT&T warned it would still be several years before the system is commercially available.
Tue, Sep. 20, 4:19 PM
- Turner Networks (TWX -0.4%) is the latest in a string of content creators to reach a long-term carriage deal with AT&T (T -0.3%), keeping its content on DirecTV and U-verse.
- As par for the recent course, the deal covers availability on AT&T's upcoming DirecTV Now and DirecTV Preview streaming services, set for Q4 rollout, as well as TV Everywhere rights on a number of platforms.
- That provides more viewing opportunities for AT&T customers of Turner nets including TBS, TNT, CNN, HLN, Turner Classic Movies, truTV, Cartoon Network and Boomerang.
- In recent weeks, AT&T has also reached deals with NBCUniversal and Discovery Communications.
Tue, Sep. 20, 2:57 PM
- With wireless subscription growth slowing overall, the "try harder" guys each say they're stealing each other's customers.
- T-Mobile (TMUS -2.8%) and Sprint (S -5.9%) said today they're taking subscribers from their small competitor, and thus presenting a tougher challenge to industry leaders AT&T and Verizon.
- They can't both be 100% right, though time may tell. T-Mobile provided a preliminary update, while Sprint will release official results at the end of the quarter.
- In its update, T-Mobile said it added about 753,000 branded postpaid phone subs in Q3 so far -- pacing below last year's Q3 gain of 1.1M with just a couple of weeks left, but ahead of Q2 in branded postpaid phone and prepaid net adds.
- To be fair, T-Mobile (a standout in industry subscriber growth in recent quarters) says it's taking customers from everyone this quarter: 250,000 postpaid phone and prepaid net customer adds from Verizon (VZ +0.3%), and 400,000 from AT&T (T -0.1%), to go along with 300,000 from Sprint.
- T-Mobile will provide a business update in a presentation to Goldman Sachs' Communacopia Conference Thursday at 10:30 a.m. ET.
- Previously: Sprint's Claure: All employees tied to turnaround; Five-year plan on track (Sep. 20 2016)
Mon, Sep. 19, 11:57 PM
- AT&T (NYSE:T) looks to be working behind the scenes to cut the rates it's paying for space on cell towers, with the implication that it could switch to competitors' spaces to make it happen.
- Letters seen by FierceWireless show AT&T pressing tower operators for new terms, and in some direct language asking for lower rates. An AT&T spokesman tells them that the company's execs are "frustrated with the current tower cost structure and believe it is not sustainable."
- In one case AT&T pursues early termination rights, the chance to modify equipment without additional cost, reduced (or no) annual escalators on the rates, and simply "rents reduced to competitive rates."
- "A ‘no’ or non-response will trigger AT&T’s review of alternate locations,” the company says at one point.
- Tower players: AMT, CCI, SBAC, CSAL
Mon, Sep. 19, 7:50 PM
- The Department for Professional Employees -- a coalition of technical-worker unions affiliated with AFL-CIO -- has joined other unions in sounding off against the FCC's revised set-top box rules proposal.
- The group criticized the "de facto" compulsory licensing scheme set up by the agency's chairman, Tom Wheeler, in order to prevent anticompetitive agreements among pay-TV providers.
- That regime is "unacceptable and unworkable," the DPE says.
- "The FCC does not have this authority," says Paul Almeida, the DPE's president, in a statement. "The one-sided proposal undermines the value of creative works, shrinks revenue streams that middle-class creators depend on to make a living and threatens the hard-fought wages and benefits of creative industry workers."
- Pay TV players: CMCSA, CHTR, CVC/OTCPK:OTCPK:ATCEY, T, DISH, VZ, FTR, CTL
- Previously: FCC Chairman: Open to changes to get set-top box rules passed (Sep. 15 2016)
Thu, Sep. 15, 2:20 PM
- Speaking to the Senate, FCC Chairman Tom Wheeler says he may yet change his proposal of rules to open the market for pay TV set-top boxes, set for a final vote by the commission on Sept. 29.
- Wheeler's proposal, which focuses heavily on requiring apps from providers so that consumers can watch without costly rental boxes, had been modified already from a plan offered in January.
- The FCC has said the set-top box market is at $20B a year, and consumers pay an average annual cost of $231 (aside from programming and service costs) for the boxes -- up 185% since 1994 while other consumer electronics have dropped 90% in price over that period.
- Any new revisions may be targeted at the swing vote on the five-member FCC, Democratic Commissioner Jessica Rosenworcel, who has expressed concerns about the licensing body created by the new rules to prevent anticompetitive agreements between providers.
- Pay TV players: CMCSA, CHTR, CVC/OTCPK:OTCPK:ATCEY, T, DISH, VZ, FTR, CTL
Tue, Sep. 13, 3:52 PM
- NBCUniversal (CMCSA -1.2%) and AT&T (T -1.5%) have agreed to a long-term extension of their distribution deal, keeping the network's channels on DirecTV and U-verse for the future.
- The deal covers NBCU's broadcast and cable offerings, for linear TV, online (on demand) and TV Everywhere app access.
- It also accounts for new streaming services DirecTV now and DirecTV Preview, coming in Q4.
- DirecTV will also be able to show major sporting events in 4K, boosting its ultra HD programming goals.
Tue, Sep. 13, 10:54 AM
- AT&T (T -1.7%) has won extensions to two of its contracts under Networx, the network services buying program of the General Services Administration.
- The two contracts, Networx Universal and Networx Enterprise, extend into March 2020 and May 2020 respectively.
- Federal agencies will be able to continue buying service from AT&T under the Networx deals even as the government moves to Enterprise Infrastructure Solutions, its new technology purchasing program.
- The extensions will help agencies make a smooth transition to the new technology program, says AT&T's Mike Leff.
Fri, Sep. 9, 5:57 PM
- "Wireless clouds are starting to gather," UBS says in a report noting that historically high margins for U.S. wireless carriers may have peaked, with negative impact coming as soon as next year.
- U.S. wireless firms have posted record profits for three years as carriers -- AT&T (T -3.6%), Verizon (VZ -3.3%), T-Mobile (TMUS -4.4%) and Sprint (S -2.2%) -- outpaced other global regions in average revenue per user, churn, EBITDA and margins.
- But three factors will conspire to depress EBITDA growth, UBS says: the decline of the margin accounting boost from the switch to equipment installment pricing; rising churn as phone replacement cycles shorten; and falling ARPU as carriers are forced to keep cutting data costs. "While it's hard to gauge the impact of recent price changes on ARPU, one thing is for sure, carriers are providing more value for the same price, lowering the inherent yield of additional data usage.”
- The firm's top pick in the sector is still T-Mobile, based on customer acquisition, but it notes that AT&T's diversification and bundling via DirecTV puts it in a good position.