39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Thu, Nov. 17, 1:00 PM
- After a few years of delay, Mexico has elected to award the contract for a huge wholesale mobile network to the Altan group, a consortium that will need to create a multibillion-dollar operation to cover 85% of the population (and the only remaining bidder).
- The network was originally planned as part of telecom reforms firmly targeting the dominance in-country of Carlos Slim's America Movil (NYSE:AMX).
- It's set up to build a 20-year public-private partnership (Mexico is helping out with costs) to develop a nationwide 4G LTE network that others would rent, though mobile operators (AMX -1%, TEF +0.9%, T +1%) are reticent.
- The Altan group is backed by Morgan Stanley Infrastructure and the World Bank's International Finance Corp., and includes Alfa unit Axtel and Mexico's Megacable.
- The group is planning to surpass requirements by covering 92.2% of the Mexican population within seven years.
- Previously: Mexico launching wholesale mobile network tender (Jan. 29 2016)
Wed, Nov. 16, 3:56 PM
- Perhaps seeing writing on the wall at the FCC, Chairman Tom Wheeler has dropped a planned reform of the the U.S. business data services market, a $45B industry occupied by key telecom infrastructure players.
- Following pressure from Republicans on Congress' oversight panels, Wheeler pulled a vote on the BDS reform from tomorrow's agenda. Any measures approved in the next couple of months would face reversal if president-elect Donald Trump restocks the FCC as a Republican-majority panel.
- Wheeler had already scaled back original plans for reforming BDS, a market that covers special access lines that run much of modern society (including ATMs and credit card readers among other financial networks, and hospital/school networks, as well as mobile backhaul).
- Key BDS players are moving into the close: T +1.1%, VZ +1.2%, CTL -0.7%, FTR +3.8%, BT -0.7%.
- Previously: With White House changing, set-top box reform may be on life support (Nov. 16 2016)
- Previously: Frontier Communications issues statement on FCC fact sheet; FTR, CTL jump (Oct. 07 2016)
Wed, Nov. 16, 3:31 PM
- With Donald Trump set to take over the White House, FCC Chairman Tom Wheeler's plan to reform the pay TV set-top box market is "95% dead," according to one analyst.
- Wheeler's proposal to kill off the boxes met with opposition from the industry even after it was modified to be much closer to pay TV providers' app-focused approach. The FCC said the market for the boxes sat at $20B a year and that the cost of renting them had gone up 185% since 1994, while other consumer electronics dropped 90% in price over that period.
- "I would say it's 95 percent dead," said Bloomberg Intelligence's Matthew Schettenhelm. "It's a very long road to get this done.”
- House Republicans have asked Wheeler to focus on the ongoing broadcast incentive spectrum auction, and not to move forward with “complex and controversial items that the new Congress and Administration will have an interest in reviewing."
- That includes an open item on Business Data Services as well, not to mention lengthy reviews ahead for AT&T/Time Warner and Level 3/CenturyLink deals.
- Public Knowledge's Chris Lewis says it's too early to hold a funeral: "We don't know what Trump thinks about set-top boxes."
- Pay TV players: CMCSA, CHTR, CVC/OTCPK:OTCPK:ATCEY, T, DISH, VZ, FTR, CTL
- Previously: FCC pulls set-top box vote from today's meeting agenda (Sep. 29 2016)
Wed, Nov. 16, 3:06 AM
- Although a press release was published a few days ago, news outlets are now reporting that AT&T (NYSE:T) will collaborate with NASA to develop an Unmanned Aircraft System Traffic Management program to allow agencies to monitor drones.
- The solution will make it safer for drone operators to plan and monitor flight paths, navigate UAVs, use drones for surveillance and will likely reduce the threat of cyberattacks.
Fri, Nov. 11, 6:47 PM
- AT&T (T -0.2%) is taking a page out of T-Mobile's (TMUS +0.7%) playbook when it comes to videos and their massive data appetite.
- The telecom's new "Stream Saver" feature is designed to make limited data buckets go "further" for customers, by streaming most higher-definition video to mobile devices at standard definition quality: DVD-level, about 480p.
- It will be available on AT&T's most popular plans with data (including GoPhone prepaid), and customers will be able to turn it on or off.
- If that sounds familiar, it's similar to what T-Mobile did when introducing its "Binge On" feature, exempting a wide swath of video viewing from data buckets (but doing so by downscaling the video to 480p). But Binge On has raised chatter about whether exempting data violates provisions of the FCC's net neutrality regulations, designed to treat all data equally without favor.
- AT&T's plan isn't free data, but promises to use less data when watching video, if customers choose to turn it on.
- AT&T is planning to zero-rate (exempt entirely) content on its upcoming DirecTV Now streaming video service for its own wireless customers.
Fri, Nov. 11, 1:57 PM
- AT&T (T -0.4%) is still pushing to dismiss a federal case over throttling that the Federal Trade Commission is continuing to appeal.
- The telecom got a court win in August when the Ninth Circuit Court of Appeals threw out the FTC's suit, which had charged the company with cutting Internet speeds on customers who held unlimited-data plans.
- The FTC said it would seek a re-hearing since the court decision had "significant ramifications" for its authority.
- Now AT&T has filed papers with the court asking that the previous dismissal be upheld.
- At the end of the day, the FTC cannot dispute that, in the 102-year history of the FTC Act, it has never been permitted to press a case against a common carrier," AT&T says in its filing. "A decision of this court re-affirming that age-old result is not one of exceptional importance warranting ... review.
Thu, Nov. 10, 3:58 PM
- After some high-profile hand-wringing about whether AT&T's plan to give its customers data-cap exemptions for impending streaming service DirecTV Now violated net neutrality practices, the FCC has weighed in further.
- The agency wrote AT&T (T -2.3%) to express "serious concerns" about the practice, known as "zero rating": It "“may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T."
- AT&T actually began zero-rating with the DirecTV video app in September, but the wide launch of DirecTV Now -- promising more than 100 channels for a base $35/month -- will make stark the differences in data usage between those who are AT&T wireless customers, and those who aren't.
- AT&T's Robert Quinn responds: “We welcome any video provider that wishes to sponsor its content in the same ‘data free’ way ... We’ll do so on equal terms at our lowest wholesale rates.”
- Previously: AT&T sets streaming TV service price at $35/month (Oct. 25 2016)
Thu, Nov. 10, 2:11 PM
- Starz (STRZA +0.7%) is joining in on AT&T's (T -1.7%) DirecTV Now streaming service.
- The Starz and Starz Encore premium channels (also including Starz Encore Westerns), eight in total, will be part of the new service when it launches this month, and more will be part at a later date, including entire video on demand catalogs.
- Starz has slowly been making a splash in the shifting media world, growing its original series (including Power, Survivor's Remorse, Outlander and Ash vs. Evil Dead) and nabbing first window rights to blockbusters including Star Wars: The Force Awakens and Avengers: Age of Ultron.
Wed, Nov. 9, 11:34 AM
- While Time Warner is trading lower as investors digest a slimmer chance of a buyout by AT&T under a Trump administration, Sprint (NYSE:S) -- a company long thought to again become a merger prospect after a change in the White House -- is up 12.5% and hitting two-year highs today.
- Its oft-discussed merger matchup partner, T-Mobile (NASDAQ:TMUS) is up 3.8%.
- Meanwhile, changes are likely coming to the FCC, Wells Fargo argues: It will at least be more conservative, if not working under new leadership soon; expecting Chairman Tom Wheeler to stay a full term is "no longer realistic."
- "If the rhetoric of those surrounding Trump’s campaign rings true, we can expect a Republican FCC to make a big push to roll back some of the regulations put in place under President Obama such as the Title II/Net Neutrality rules," writes analyst Jennifer Fritzsche. "There may also be a push to roll back some or all of what the FCC just did on privacy."
- "It’s unclear whether Chairman Wheeler will be able to act on the open items related to Business Data Services or set top box reform before he departs and if he does not, some suggest a Republican FCC will reverse course on these two items. There is also a big question on how a Trump FCC will view transactions including the recently announced T/TWX merger and the LVLT/CTL transaction."
- LVLT +0.4%; CTL +0.5%. TWX -1%. Names tied to net neutrality: T, VZ, CMCSA, CHTR, OTCPK:ATCEY, CTL, FTR, CCOI, DISH.
Wed, Nov. 9, 10:25 AM
- Time Warner (TWX -1.6%) is lower the morning after America elected Donald Trump its next president -- the man who called deals like AT&T's (T +0.5%) $85B buyout pact "poison."
- "Deals like this destroy democracy," Trump said at a recent rally speaking about the buyout. He said a Trump administration would never sign off on the acquisition since AT&T and CNN together would be "too much concentration of power in the hands of too few."
- That likely includes ripple effects on what has been a fairly rapidly consolidating media sector. Lions Gate (LGF -0.6%) and Starz (STRZA -0.4%) are set to combine and a number of other deals are in the speculative stages as telecoms and content creators adjust to a shifting landscape.
- AT&T looks forward to working with Trump and says it's still optimistic about the Time Warner deal, according to CFO John Stephens.
Tue, Nov. 8, 12:11 PM
- Oppenheimer's downgraded AT&T (T +0.5%) on the prospect that the FCC could jump in with the Justice Dept. on a review of the telecom's $85B deal for Time Warner (TWX +0.1%).
- And that deal review should be a long slog, says Tim Horan: lasting into 2018, he figues, during which time he expects AT&T stock to be range-bound.
- The DOJ suing the company over the Dodgers' TV channel is an "ominous sign," he says, and the FCC will likely want a piece due to the approach to "zero rating" of the DirecTV Now streaming service.
- He reduced the firm's rating on shares to Market Perform. Meanwhile, seeing a more attractive dividend at CenturyLink (CTL +4%), Horan upgraded CTL to Outperform. Oppenheimer has a $30 price target, implying near 24% upside from today's higher price.
Mon, Nov. 7, 8:07 PM
- The synergies from AT&T's (T +0.9%) $85B deal for Time Warner (TWX +1.5%) could be that much sweeter due to an accounting change coming to revenue recognition in 2018 (and using lessons AT&T learned in the DirecTV deal).
- The new standard affects recognizing revenues from customer contracts, creating issues for companies that feature factors like tiered pricing, volume discounts and other marketing offers, and contract modifications along with other contract terms.
- AT&T and Time Warner expect synergies of $1B within three years of closing. But aside from how the new standards affect stand-alone AT&T (such as allocating and timing of revenues between services and handsets), Time Warner sports a programming licensing backlog of $6.9B.
- That's future revenue not yet recognized, and under the new standard licenses could be treated as transferable rights, MarketWatch notes. And that could give AT&T closer control over measurement of deferred taxes and income taxes (along with a positive effect on shareholder equity).
Mon, Nov. 7, 10:41 AM
- Time Warner (NYSE:TWX) is up 1.2% today as Credit Suisse -- seeing a good chance for approval of AT&T's (T +0.9%) $85B buyout of the entertainment giant -- upgrades it to Outperform.
- That's up from a Neutral stance, and analyst Omark Sheikh has reiterated a $107.50 price target, implying 23% upside from today's pricing.
- Pessimism about the deal's chances is "overdone," Sheikh says, as it's a vertical transaction. And blocking it on public interest grounds (usually the bailiwick of the FCC) is "very difficult to justify."
- Even if the deal doesn't get an OK, downside is limited for Time Warner, he says: Fundamentals are good and it wouldn't preclude other suitors from getting involved.
- Previous AT&T/Time Warner coverage
Fri, Nov. 4, 2:29 PM
- DirecTV (NYSE:T) field services employees in the Southeast have voted to ratify a labor deal between AT&T and the Communications Workers of America.
- That deal covers about 1,050 employees. As with previous such ratifications (last week in the Midwest and Southwest), the deal puts the employees into an existing AT&T contract.
Thu, Nov. 3, 10:37 AM
- October monthly performance was: -2.87%
- 52-week performance vs. the S&P 500 is: +5%
- $0.18 in dividends were paid in October
- Top 10 Holdings as of 9/30/2016: AT&T Inc (T): 5.35027%, Exxon Mobil Corp (XOM): 5.13076%, Verizon Communications Inc (VZ): 4.13129%, Chevron Corp (CVX): 3.71538%, General Electric Co (GE): 3.29251%, Procter & Gamble Co (PG): 3.2247%, Wal-Mart Stores Inc (WMT): 2.95756%, Pfizer Inc (PFE): 2.82962%, Philip Morris International Inc (PM): 2.75804%, Kinder Morgan Inc P (KMI): 2.44856%
Thu, Nov. 3, 8:48 AM
- October monthly performance was: -0.58%
- 52-week performance vs. the S&P 500 is: +12%
- No dividends were paid in October
- Top 10 Holdings as of 6/30/2016: General Mills Inc (GIS): 3.56363%, AT&T Inc (T): 3.10141%, Coca-Cola Co (KO): 2.92358%, Campbell Soup Co (CPB): 2.52377%, Exelon Corp (EXC): 2.36382%, Suncor Energy Inc (SU): 2.32307%, The Hartford Financial Services Group Inc (HIG): 2.28103%, PPL Corp (PPL): 2.13051%, The Kraft Heinz Co (KHC): 2.07219%, Heineken NV (OTCQX:HINKF): 1.90962%