39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Going Long Leap Wireless: More Than A Leap Of Faith
Helix Investment Research
Helix Investment Research
Wed, Jan. 20, 8:21 PM
- Vodafone (VOD -2.1%) looks to be moving ahead with a public offering of its India wireless business -- a deal that could be a gateway to asset spinoffs or even more merger talk.
- Heavy chatter about a merger with Liberty Global (LBTYA -1.5%) covered much of last year, though it pivoted to more modest talk of asset swaps in Europe before even those discussions were called off. A New Year's Eve report posited that merger talks were back on.
- AT&T (T -1.7%) is said to be a prospective merger partner too, now that its acquisition of DirecTV is settled.
- Vodafone still has a tax issue to sort out with India, and it could use a March spectrum auction to fill out local markets for 4G service. And then: "Statements made by Group CEO Vittorio Colao make us believe a listing in 2016 is not only possible ... but probable — especially as we expect outstanding tax cases to finally get resolved and missing 4G spectrum gaps filled," says Bernstein's Chris Lane.
Wed, Jan. 20, 10:45 AM
- In the early months since AT&T's (T -1.6%) buyout of DirecTV wrapped last summer, CEO Randall Stephenson says it's going as planned and that the company is realizing its vision of combining wireless and video.
- "Being really early, six months into it, I would tell you we're more enthusiastic about it today than we were when we first started it," he said at the World Economic Forum.
- The company has gotten more active on cross-promotion, with a deal to reinstate unlimited wireless data (and unlimited video streaming) for customers who sign up for TV (U-verse or DirecTV), using a block of unused spectrum. The company hasn't said how long they would keep that offer open.
- As for managing the cost of video demands over LTE: "Satellite is the most efficient video delivery technology known to man. Fiber being next, wireless probably being the highest. But at this stage, we're in a unique position by virtue of having the spectrum portfolio we have and so it's a position we're going to take advantage of."
- He also sounded an upbeat tone about the company's moves in Mexico: "We came in and acquired two companies in Mexico, to go back into that market," he says. "Each of those deals were done in 30, 45 days ... it's an environment very receptive to investment, and the new regulatory environment they put in place gives us a lot of confidence." The company's investing in its nationwide LTE network there, he says: It's already deployed LTE to 40M people and will ultimately get LTE to 100M people in Mexico.
Fri, Jan. 15, 7:18 PM
- Telefonica (TEF -3.5%) is expressing interest in buying Latin American assets from AT&T (T -0.9%) that could come to $10B in value, Reuters reports.
- AT&T acquired the pay TV assets in its acquisition of DirecTV last year, and CEO Randall Stephenson said in December that the company would consider selling them but was in "no rush" and would be patient.
- A source told Reuters that other parties were interested in specific country assets -- AT&T acquired services in Brazil, Colombia, Venezuela and Argentina among other countries -- so AT&T could run multiple sale processes and deal with a company like Liberty Global (LBTYA -4.7%).
- Meanwhile, Telefonica has been making portfolio changes but against some €50B in debt (about $54B). It's looking to sell Spanish infrastructure and agreed to sell its O2 business in the UK to CK Hutchison holdings for $15B.
Fri, Jan. 15, 5:32 PM
- Sprint (S -9.9%) has a "radical" plan to overhaul its cell network that could save up to $1B -- but might result in hiccups along the way.
- The carrier plans to relocate radio equipment from towers leased from private companies, namely Crown Castle (CCI -5.8%) and American Tower (AMT -4.2%), onto cheaper properties owned by the government, Re/code reports.
- It's also hoping to reduce its dependency on backhaul from AT&T (T -0.9%) and Verizon (VZ -1%) by using microwave technology a la Clearwire instead. The company cuts annual checks of $1B for backhaul to the two rivals.
- One source says the company's "Next Generation Network" will result in a new wave of disruptions and could end up with less coverage in regions where Sprint has few subscribers: “Getting there is going to be a nightmare ... It’s going to be very, very disruptive.”
- Sprint will lease towers from privately held Mobilitie, which will locate where possible on government-owned ROW.
- “Sprint’s plan is not for the faint of heart,” Wells Fargo's Jennifer Fritzsche writes in a note. “Sprint needs to be solely focused on avoiding mistakes of the past, where network overhauls caused major disruptions in the network’s performance.”
Thu, Jan. 14, 12:57 PM
- AT&T (T +1.7%) says it's looking to hire nearly 300 people in Missouri and Kansas, part of a continuing investment in the Midwest region.
- The jobs are mainly technicians and retail support, and more than half of the available jobs in the region are located in the Kansas City metro.
- The company has invested more than $2.5B into wireless and wireline networks in the two states from 2012-2014.
Dec. 31, 2015, 5:13 PM
- T-Mobile (TMUS -1.6%) ended the year as the big winner among the U.S. wireless big four, finishing up 45% for 2015. AT&T was the only other to gain, and was up 2.4% for the year.
- Looking ahead, T-Mobile is already hoping to make a splash in the FCC's broadcast incentive auction of wireless airwaves, with CEO John Legere looking to be a "winner."
- "The lowband spectrum auctions will be the most important in recent U.S. history and will shape the future of the wireless industry for decades to come," Legere writes. "I predict that T-Mobile will walk away a winner."
- AT&T (T -1%) and Verizon (VZ -1.2%) will have more money to spend in the auction, but likely less interest, as both built their LTE networks on "beachfront" 700 MHz spectrum.
- Wells Fargo, though, has predicted that AT&T will spend the most (along with Verizon spending the least) in the sale. Sprint (S -0.3%; down 12.8% this year) has said it will sit it out.
Dec. 17, 2015, 4:50 PM
- Once the deal closes, IBM will deliver the manged app/hosting services currently provided by AT&T. The offerings will be "aligned" with IBM's cloud services portfolio.
- No details have been given yet about the deal's revenue impact, or about how much (if any) money is changing hands. It follows a Q3 in which IBM's global tech services revenue fell 10% Y/Y to $7.9B, and its global business services revenue 13% to $4.2B, amid cloud and forex pressures. The company is already a notable player in the managed app and hosting markets; its SoftLayer unit participates in the latter.
- Within its Business Solutions segment, AT&T's fixed strategic services revenue (has included hosting, Ethernet, cloud, VPN, and security services) rose 12.6% Y/Y in Q3 to $2.76B. That helped offset an 8.7% drop in legacy voice/data service revenue to $4.5B.
Dec. 15, 2015, 1:06 PM
- CenturyLink (CTL +3.5%) -- and to a lesser extent, Frontier Communications (FTR -0.4%), Verizon (VZ +0.6%) and AT&T (T +0.8%) -- could see upside with Congress looking at renewing a capex tax break for industries including telecommunications.
- UBS analyst John Hodulik sees legislators pursuing a retroactive 2015 extension of bonus depreciation, which lets companies deduct half the cost of some capital equipment purchases immediately, and which would boost free cash flow. Legislators could also extend the deal into 2016 or beyond as well.
- "We believe CenturyLink would be the largest beneficiary" of that extension, Hodulik says, with free cash flow rising 44% after its tax bill drops from an expected $1B to around $350M.
- Other companies would benefit as well: Frontier's free cash flow would rise about 19%, while AT&T and Verizon could see gains of 11% each if the break gets a retroactive extension.
Dec. 3, 2015, 8:04 PM
- Another week brought more promotions (at least in holiday shopping season) for U.S. wireless carriers fighting for customers.
- Verizon (VZ -0.8%) today offered 2 GB of bonus data for new phones added or upgraded on its larger data buckets (XL or XXL, in the company's clothing-size parlance). The deal is good just through Jan. 6.
- The data's shareable with devices on the plan, but tablets/connected devices alone aren't eligible to be added/upgraded for the deal.
- Meanwhile, T-Mobile's (TMUS -3.3%) target of the day is AT&T (T -1.4%); it's offering those customers an iPhone bargain (128 GB model for the price of the 16 GB model) and half off financed in-store accessories (focused on speakers, headphones, smartwatches, fitness trackers).
- T-Mobile says the iPhone deal represents a $200 value, given back via bill credit. Its deal is available Dec. 4 through Dec. 13.
Dec. 2, 2015, 3:42 PM
- It won't be the most surprising development, but Moody's is forecasting that wireless price wars will prevent real expansion in industry margins in the coming year.
- The firm estimates revenues (including equipment) to grow 3-4% overall, but that EBITDA margins will expand about 1%.
- In a bid to steal customers from the top two -- AT&T (T -0.4%) and Verizon (VZ -1.4%) -- Sprint (S -2.1%) and T-Mobile (TMUS -0.9%) have been pushing aggressive promotions, from Sprint resurrecting a "cut your bill in half" idea to T-Mobile dangling $200 in front of Sprint switchers.
- AT&T won't be chasing customers this season, says Jefferies' Mike McCormack -- the company believes the subscriber base it's losing is coming from "mostly lower-value postpaid subscribers and prepaid," he says.
Nov. 25, 2015, 7:23 PM
- Wells Fargo has picked its winners in March's FCC broadcast incentive auction for wireless spectrum -- and it figures AT&T (T +0.2%) will dominate bidding that should total $30B-$35B.
- Analysts at the bank predict up to $10B spending coming from the telecom giant for a nationwide block of 2x10 MHz airwaves.
- T-Mobile (TMUS -3.7%) -- which has been signaling aggressive moves in the auction -- will be second, with $8B spent, the analysts said, while Verizon (VZ -0.6%) should be last with $5B in bids. Sprint (S -1.8%) has already said it's sitting this one out.
- While AT&T backtracked a bit on pledges to spend $9B while it was digesting DirecTV (NASDAQ:DTV), the analysts think the benefits of a nationwide block may signal higher spending from the company.
- Verizon, meanwhile, has credit to spend up to $10B, but probably won't: "Similar to what T has said publicly and based on our conversations with spectrum experts, we look for VZ to contribute in a meaningful way if 2x10MHz bands are made available."
- Previously: T-Mobile -2.2% as it pledges $200 for each Sprint line that switches (Nov. 25 2015)
- Previously: SoftBank spending: Arora on investment universe, Sprint worries (Nov. 24 2015)
Nov. 16, 2015, 7:46 AM
- The latest 13F from Berkshire Hathaway (BRK.A, BRK.B) shows a new 59.3M share stake in AT&T (NYSE:T), and the GM stake taken up to 50M shares from 41M. At least part, if not all of the T stake is the result of shares received in the DirecTV merger.
- Phillips 66 (NYSE:PSX) is up to 61.5M shares from about 30M; Kraft Heinz (NASDAQ:KHC) 325.6M shares from zero; Suncor (NYSE:SU) 30M shares from 23.3M, John Malone (LMCK, LMCA) a total of about 24M shares from about 13M.
- Buffett trimmed his Wal-Mart (NYSE:WMT) position to 56.2M shares from 58.3M.
- AT&T +1.4% premarket
Nov. 13, 2015, 6:49 PM
- Along with a price hike for its unlimited wireless phone plans on Sunday, Verizon (VZ -1.3%) is bringing back activation fees, instituting a $20 charge for new lines of service.
- The carrier had waived the fees just a few months ago when it abandoned phone subsidies and service contracts; they were $40 at the time for customers who signed two-year deals.
- AT&T (T -1.1%) charges a $15 fee for devices sold through its installment program, or $45 for a two-year contract or purchased device.
- Verizon is raising the price of its unlimited data plan by $20/month on Sunday, a move in line with recent ones by its competitors. Sprint (S +0.7%) raised its own unlimited data plan by $10/month at the end of September.
- At least Verizon waited until after T-Mobile's (TMUS +2%) "Un-carrier X" event to drop the news; T-Mo's John Legere is fond of lambasting competitors for broad line activation charges, though every carrier has one somewhere.
Oct. 22, 2015, 4:22 PM
- AT&T (NYSE:T) is up 2.2% after hours following a third quarter where it beat EPS consensus, but missed revenue expectations that it yesterday called "inflated," and raised its earnings outlook for the full year.
- Revenues were up 19% Y/Y to $39.1B mainly due to the DirecTV acquisition. The company said it looked like analysts who expected $40.4B were counting the DirecTV deal for the full month of July, rather than from July 25 -- from where it said it was permitted to count revenue under GAAP.
- It pointed to solid gains in domestic wireless (2.5M net adds) and a positive move under DirecTV (26,000 domestic net adds), as well as 192K IP broadband net adds.
- Cash from operations came to $10.8B and free cash flow was $5.5B.
- For the full year, AT&T now sees EPS in the range of $2.68-$2.74, above consensus of $2.64, and free cash flow of $15B or better.
- Conference call coming at 4:30 p.m. ET.
- Previously: AT&T slips to session low, saying consensus for Q3 'inflated' (Oct. 21 2015)
Oct. 21, 2015, 3:38 PM
- AT&T (NYSE:T) shares -- up in the morning and flat at midday -- slipped 0.7% as the company says the consensus estimates for its Q3 are "inflated," according to Dow Jones.
- The company's point is that analysts are including DirecTV for the full month of July, while it will only report results from the satellite acquisition since July 25.
- Capital IQ consensus is expecting EPS of $0.68 on revenues of $40.39B for the quarter.
- The company is set to release earnings after the close tomorrow, with a 4:30 p.m. ET conference call scheduled.
- Updated: From AT&T's statement -- “Under GAAP we are only allowed to include revenue beginning July 25 so current consolidated revenue consensus estimates are inflated ... This is a one-time variance as analysts sort through some of the normal modeling of an acquisition ... It is clear many revenue estimates for DirecTV include the full month of July."
- Previously: Ahead of earnings, AT&T sets reporting segments, Venezuela writedown (Oct. 15 2015)
- Previously: AT&T details closure of DirecTV deal (Jul. 24 2015)
Oct. 16, 2015, 5:07 PM
- The FCC is probing four companies -- AT&T (T +1%), Verizon (VZ +0.1%), CenturyLink (CTL -0.7%) and Frontier Communications (FTR -1.9%) -- over terms they set for business broadband, the dedicated mission-critical lines that make everything from schools to ATMs work.
- That's a $20B market, and competitors including Sprint (NYSE:S), Level 3 (NYSE:LVLT) and Cogent (NASDAQ:CCOI), along with Amazon.com and others, are complaining about unfair lock-ups with large early termination fees.
- The FCC has found "potentially unjust and unreasonable practices" that rise to the level of an investigation. It says the four companies it's probing use plans with “a complicated web of all-or-nothing bundling, loyalty and term commitments, complex enforcing penalties” and other provisions, and asked them to respond by Dec. 18.
- In a mailed statement, industry group USTelecom (of which the four companies are members) says the investigation is a "rear-view mirror" approach. “Although the FCC says that it wants to be a data-driven agency, promote facilities-based competition, and incent broadband investment, it just can’t seem to get beyond its telephone-era mindset when it comes to regulating 20th century legacy services," says USTelecom President Walter McCormick.
AT&T, Inc. provides telecommunication services and products, including wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, telecommunications equipment, managed networking and wholesale services. It operates business... More
Industry: Telecom Services - Domestic
Country: United States
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