39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Jul. 23, 2015, 5:33 PM
- On AT&T's (NYSE:T) Q2 earnings call, CFO John Stephens steadfastly refused to take questions about the company's deal to acquire DirecTV -- an order is circulating at the FCC to finally approve the $49B deal -- but he did weigh in with a brief statement regarding the reported conditions it's taking on.
- "We feel very confident that we can make adequate return on any investment we make as part of this deal," Stephens said. "We also expect $2.5B of cost synergies from this transaction -- that also has not changed."
- FCC Commissioner Michael O'Rielly says he voted in favor of the deal this afternoon -- meaning that with Chairman Tom Wheeler's declared support, the deal's one vote away from approval.
- When it comes to the FCC's broadcast incentive auction set for early 2016, "We'll be interested and prudent in investigating the opportunities," but Stephens says the company is putting spectrum to use rather than building out towers.
- After hours, AT&T is now up 2%.
- Previously: AT&T up 1.8% after solid earnings beat (Jul. 23 2015)
- Previously: FCC chairman lays out conditions for AT&T/DirecTV approval order (Jul. 21 2015)
Jul. 23, 2015, 4:25 PM
- AT&T (NYSE:T) is up 1.8% after hours, following a solid Q2 beat on profit and expanding margins as well as healthy cash flow. Revenues that rose 1.4% Y/Y were up 2.2% if adjusting for the sale of its Connecticut wireline properties.
- Revenue breakout: Service, $29.5B (down 0.1%); Equipment, $3.47B (up 15.1%). By segment: Wireless, $18.3B (up 2.1%); Wireline, $14.2B (down 2.9%).
- Wireless had 2.1M net adds (410K postpaid, 331K prepaid and 1M connected cars). Total churn was 1.31% and postpaid churn just 1.01%. Phone-only postpaid ARPU increased 6.1% Y/Y. The wireless operating margin was 25.6%.
- Wireline voice connections dropped by 652K (a 14% Y/Y improvement); total wireline broadband connections dropped by 136K and U-verse video connections fell by 22K.
- Cash from operations of $9.2B resulted in free cash flow of $4.5B.
- Conference call at 4:30 p.m. ET.
Jul. 21, 2015, 6:50 PM
- FCC Chairman Tom Wheeler confirms that an order has been circulated to agency commissioners recommending approval of AT&T's $49B purchase of DirecTV, with conditions.
- If approved by the FCC, "2.5 million customer locations will have access to a competitive high-speed fiber connection," Wheeler writes. "This additional build-out is about 10 times the size of AT&T’s current fiber-to-the-premise deployment, increases the entire nation’s residential fiber build by more than 40 percent, and more than triples the number of metropolitan areas AT&T has announced plans to serve."
- Two other key points: AT&T won't be able to exclude its affiliate video services from broadband data caps (which would give its own products a toll-free leg up), and will have to submit all completed interconnection agreements to the FCC, along with network performance reports.
- Updated 7:05 p.m.: "We are pleased the Department of Justice has completed its review of our acquisition of DirecTV," says AT&T in its statement. "We look forward to gaining the approval of the Federal Communications Commission so we can quickly begin providing consumers with the benefits of this combination."
- After hours: DTV +1.1%; T +0.1%.
- Previously: WSJ: FCC ready to OK $49B AT&T/DirecTV deal (Jul. 21 2015)
Jul. 17, 2015, 3:38 PM
- AT&T (T -0.4%) opens a new front next week in its gigabit offerings with a move into the high-tech hub of Durham, N.C.
- The move is a departure for AT&T as it doesn't operate wired services there, meaning a fiber network basically built from scratch. A university-driven Next Generation Network initiative does operate in parts of other cities in the Research Triangle area, including Raleigh and Chapel Hill.
- Frontier (FTR +3.8%) began connecting Durham customers to fiber last year, and Google has signaled its own Fiber rollout there as well.
Jul. 10, 2015, 4:08 PM
- If AT&T (NYSE:T) is allowed to raise rates for last-mile services -- wholesale, special access rates -- then small and midsized business could be hurt, Windstream (NASDAQ:WIN) is telling the FCC.
- Windstream has built its own big fiber network, but is dependent on renting "last mile" copper services from carriers like AT&T in many cases.
- "Business consumers -- including the small- and medium-sized businesses that drive economic growth and job creation, state and local governments, schools and non-profit health care providers -- will be hurt significantly if the IP transition deprives them of their choice of integrated communications solutions because the large incumbent LECs can raise prices for critical last-mile transmission," Windstream said in its filing.
- Windstream's arguing for continued access to certain loops after an incumbent local exchange carrier makes such a transition.
- Windstream stock is up 3.3% today, rebounding from a 52-week low hit in the closing minutes yesterday.
Jul. 9, 2015, 9:40 AM
- T-Mobile (TMUS +2.6%) says it gained 2.1M customers last quarter as it pushes to overtake Sprint (NYSE:S) as the country's third-largest wireless carrier.
- The adds brought T-Mobile to 58.9M users. Early figures suggest that branded new monthly phone users were 760K.
- The carrier also said it was adding Canada and Mexico to its roaming plan, calling its Simple Choice the "first and only wireless plan to span an entire continent" -- a tweak at AT&T (T +0.5%) and its ambitions for a U.S.-Mexico zone.
- Previously: Sprint's Claure to T-Mobile's Legere: Tired of 'Uncarrier bullshit' (Jul. 02 2015)
Jun. 30, 2015, 9:48 AM
- U.S. wireless firms are all trading higher out of the open as RBC Capital raises price targets on AT&T (T +0.2%), T-Mobile (TMUS +1.3%) and Sprint (S +1.1%).
- Verizon (VZ +0.2%) is also up comparably with AT&T.
- The firm's best rating of the three goes to T-Mobile, with an Outperform. RBC raised its price target to $41; it's currently trading at $39.17.
- AT&T gets a Sector Perform rating and a raised price target of $37 (currently trading at $35.83), and Sprint gets a Sector Perform and a higher target of $6 (currently at $4.56).
Jun. 25, 2015, 3:26 PM
- AT&T (NYSE:T) is up 1.7% as Bank of America has upgraded shares to Buy, from Neutral, and raised the price target to $40 from $35.
- Shares are trading currently at $36.40.
- The company also plans to invest about $3B into Mexico by the end of 2018, to stretch mobile Internet coverage to 100M people, CEO Randall Stephenson said while meeting with Mexico President Enrique Peña Nieto.
- AT&T plans to cover 40M subscribers (about a third of the population) within six months, and 75M by the end of 2016.
- Earlier this year, AT&T made its major move into the market with $4.4B in investments to acquire the country's No. 3 and No. 4 wireless carriers, Iusacell and Nextel Mexico.
- Stephenson credited reforms introduced by Peña Nieto for allowing AT&T to invest in Mexico.
- New plans are coming next month to allow Mexican customers to use its North American Mobile Service Area.
Jun. 23, 2015, 3:43 PM
- T-Mobile (TMUS +0.9%) is keeping up the (spectrum) pressure, asking the FCC to block a low-band spectrum purchase by AT&T (T +2.9%) from East Kentucky Network, using the agency's "public-interest" mandate.
- AT&T, it said, had failed to meet "applicable heightened standards for demonstrating that the proposed transaction is in the public interest when balanced with the serious anticompetitive risks posed by the increased concentration of below-1-GHz spectrum."
- Keeping up a multi-front attack, T-Mobile's also teasing a new set of Un-carrier updates -- "Un-carrier Amped" -- starting this Thursday.
- Meanwhile, it's also made a literally comical new video in its fight over spectrum set-asides, portraying the company and the "FCC Five" as superheroes trying to defeat a villainous duopoly.
- Previously: Bloomberg: FCC Chairman urging rejection of T-Mobile spectrum appeal (Jun. 17 2015)
Jun. 23, 2015, 9:30 AM
- AT&T (NYSE:T) is up 1.6% premarket following a Barclays upgrade to Overweight where they note "multiple levers" driving profitability.
- Amir Rozwadowski lifted the firm's price target on the telecom to $39, from $34. Premarket, the stock is trading at $35.60.
- "The number of levers (i.e. revenue and cost synergies) that could positively impact AT&T's bottom line post the imminent close of the DirecTV (NASDAQ:DTV) transaction are too material to ignore," he says, noting declining concerns both externally and internally.
- AT&T may be among the companies best positioned for a cycle of favorable earnings revisions, and he notes management has already raised expectations for deal cost synergies ($2.5B vs. previous $1.6B) but "further opportunities exist specifically around reduced investment in legacy access infrastructure."
- UBS also upgraded AT&T shares to Buy this morning.
Jun. 2, 2015, 6:46 PM
- Mogul John Malone floated an interesting idea today: Forget Sprint and T-Mobile -- the wireless industry could get its third major alternative to Verizon and AT&T (NYSE:T) with the merger of Charter Communications (CHTR -1.6%) and Time Warner Cable (TWC -0.9%).
- Malone was speaking at his various Liberty companies' annual meetings and noted that in 2012, the cable consortium SpectrumCo got an option to participate in a wireless MVNO service with Verizon (NYSE:VZ) after the wireless firm bought $3.9B in frequencies.
- Charter wasn't in SpectrumCo then, but merger partners TWC and Bright House are. “The concept that Comcast, a greatly enlarged Charter and Cox could together offer a WiFi-optimized connectivity service with a default to a Verizon MVNO is an interesting concept," Malone said.
- He thinks "there's very little dirty underwear" left to be found in a regulatory review of Charter-TWC after the past year's scrutiny.
- Also of interest regarding Charter capex and the dividend: “Everybody's going to say, ‘Oh he’s spending too much capital,’ but I think the end result with be worth it ... To a large degree we’re betting on Tom Rutledge and his team to wake up a sleepy cable company that was treading water in all honesty for a while and trying to satisfy shareholder pressures with buybacks and dividends as opposed to putting the money into having a competitive service offering.”
- Malone company shares today: LMCA -0.1%; LMCB flat; LMCK flat; LTRPA -0.9%; LTRPB +2.2%; QVCA +0.8%; LBRDA +0.1%; OTCQB:LBRDB flat; LBRDK -0.1%.
May 18, 2015, 2:55 PM
- AT&T (T +1.8%) is planning exclusive mobile content for connected cars and has eight automaker partners to work with on the initiative.
- The company is trying to offer free or paid games and videos exclusively to the cars in an effort to sell more data, now that the market is growing more saturated with mobile phone users.
- Partners include General Motors, Audi, and Ford. AT&T's looking at different business models to make the plan happen, including different revenue shares and an advertising infrastructure.
- "A lot of (content and offers) can be targeted to the make and models of the vehicles," says AT&T's emerging-devices chief Chris Penrose.
May 5, 2015, 11:04 AM
- Netflix (NASDAQ:NFLX) is pressing the FCC to reject the $48B merger of AT&T (NYSE:T) and DirecTV (NASDAQ:DTV), according to regulatory filings revealed today, on complaints about market power -- as the merger could "lead to its becoming the largest (Internet service provider) in the country as well" as becoming the biggest MVPD.
- The remarks came as Netflix officials met with more than 20 FCC staff last week.
- "Such market power creates new incentives and abilities to harm entities that AT&T perceives as competitive threats," Netflix reps said, "and will exacerbate the anticompetitive behavior in which AT&T has already engaged."
- Netflix shares are up 3.8% today in the wake of BofA/Merrill Lynch's heavy upgrade; AT&T is down 1.2% and DirecTV is down 0.5%.
Apr. 23, 2015, 6:24 PM
- AT&T (T +4.2%) peddled $17.5B in bonds in the third-biggest debt offering on record, as it draws funds to help pay for its acquisition of DirecTV (NASDAQ:DTV) -- a media deal that looks to be a survivor as other mergers fall apart.
- The sale's part of a record year in debt sales; it's the third-biggest ever but only the second-largest this year, as Actavis sold $21B in March.
- Yield-hungry investors put in $68B in orders, nearly four times the offer. A 10-year bond was priced to yield 3.435%; a 31-year bond at 4.772%.
- The company may be getting ahead of the rush. More debt deals are likely to come ahead of any move by the Fed to raise rates, and they're likely to find investors so long as there are negative yields still in the market.
- AT&T will redeem some bonds at a premium if the DTV deal's not done by Nov. 30, though it still exepcts a Q2 closing.
- Previously: AT&T call: On reducing churn, and post-acquisition deleveraging (Apr. 22 2015)
Apr. 22, 2015, 4:31 PM
- AT&T (NYSE:T) is up 1.9% in postmarket trade, after beating EPS expectations but missing on revenue that it says was impacted by foreign exchange issues.
- The company reports 1.2M total net adds in wireless, which includes 441K postpaid and 684K connected cars.
- Churn drops to a best-ever 1.02% (from previous year's 1.07%) as the transition to no-subsidy device plans continues. (Yesterday, Verizon reported its churn fell back to 1.03%.)
- Revenue breakdown: Service, $29.96B (down 2.7%); Equipment, $3.61B (up 33.9%). Total wireless revenues were up 1.8% to $18.2B, and wireless equipment revenues were up 36% to $3.4B. Wireline revenues were $14.1B, down 3.1% (adjust for sale of Connecticut operations, down 1.2%).
- Wireless operating income was $4.4B (-12% as Mobile Share Value plans took off). Wireline operating income was $1.4B, down 3.5%.
- The company still expects its acquisition of DirecTV to close in Q2 and unsurprisingly expects higher cost synergies, to reach at least $2.5B on annual run rate by the third year after closing -- up from the previously expected $1.6B.
- Conference call at 4:30 ET (now).
Apr. 2, 2015, 4:26 PM
- Over-the-top video services seems to have accelerating momentum as more unbundling happens every week, but high-yield pay-TV companies have little to worry about just yet, Moody's says in a new report.
- Customer inertia along with the limited competition they now face should buy providers time to adjust.
- "Evolutionary, not revolutionary" is how the firm describes the pay-TV shift, saying that OTT providers, including Sony and Apple, will take a small number of subscribers for now -- even though consumer perception seems to favor OTT options.
- The firm notes rising bills could force defections, but "the average customer may not realize how much content traditional pay TV service provides, from video on demand and across multiple devices."
- Pay TV stocks today: (CMCSA +1.5%), (TWC +1.9%), (CVC +0.9%), (CHTR -0.6%), (T +0.7%), (VZ +1.1%)
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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