Dec. 22, 2014, 1:40 AM
- Mexico's Federal Competition Commission has approved AT&T's (NYSE:T) $1.7B purchase of local cellphone company Iusacell.
- The competition regulator set conditions on the deal to "avoid risks to the process of competition" in markets where Iusacell would compete with America Movil (NYSE:AMX), which previously counted AT&T as a minority investor.
- AT&T sold its America Movil shares in the summer, before announcing its deal with Iusacell in November.
Dec. 19, 2014, 1:34 PM
Dec. 9, 2014, 11:34 AM
- Though AT&T (T -3.2%) expects its total subscriber count to grow in Q4, churn will be up Y/Y, CFO John Stephens states at a UBS conference. The forecast meshes with Verizon's observation that is retail postpaid disconnects are "trending higher" both Q/Q and Y/Y amid growing price pressure.
- In Q3, AT&T's total churn rose 5 bps Y/Y to 1.36%. However, postpaid churn fell 8 bps to 0.99%.
- Earlier: AT&T, Sprint sell off following Verizon's Q4 warning
Dec. 9, 2014, 9:48 AM
- With price pressure from rivals as intense has ever, Verizon has warned it expects to see "short-term pressure" on its wireless margins and EPS, and that retail postpaid disconnects are "trending higher" both Q/Q and Y/Y.
- AT&T (T -2.8%) and Sprint (S -2.3%) aren't responding well to the news; the S&P is down 0.9%. Sprint's moves under new CEO Marcelo Claure (launched in an attempt to stem ongoing postpaid share losses) appear to be contributing to Verizon's challenges. Big Red has been gaining postpaid share relative to AT&T and Sprint, though not T-Mobile.
- T-Mobile (TMUS -5.1%) is down sharply, but shares had already sold off before the Verizon news, thanks to T-Mobile's convertible offering announcement.
Dec. 2, 2014, 11:49 AM
- In a promo that starts on Friday, Sprint (S -1.2%) will offer AT&T (T -1%) and Verizon (VZ -0.7%) subs who switch to Sprint unlimited talk/text plans similar to the ones they're currently on a 50% price cut.
- One catch: Users have to trade in their existing AT&T/Verizon phones, and make an unsubsidized purchase of a Sprint phone (via leasing, installment plans, or a regular retail purchase).
- A Sprint rep "will select the service plan that most closely matches the data allowance" of a user's AT&T/Verizon plan. The carrier will cover up to $350 worth of early termination fees and installment plan balances per line.
- The offer is the latest in a series of aggressive promos and price cuts launched by new Sprint CEO Marcelo Claure, who has made a priority out of halting postpaid share losses. In addition to AT&T/Verizon, the promo takes aim at T-Mobile (TMUS -0.4%), which has been grabbing postpaid share (especially on the low-end) with its own aggressive offers.
- T-Mobile and Verizon's wireless service revenue respectively rose 10.6% and 4.8% in Q3, while AT&T and Sprint's fell 0.2% and 5%.
Dec. 1, 2014, 7:12 PM
- By recognizing all of the revenue due from smartphone installment plan payments up-front, AT&T (NYSE:T) is "dramatically inflating EBITDA and earnings," argues industry analyst Craig Moffett. "Without the accounting distortions, AT&T’s EBITDA growth is falling by double digits; in Q3, the company’s YoY earnings would have fallen by 17%."
- The revenue recognition policy is one reason AT&T is expected by the Street to see its EPS rise 3% this year to $2.57, even as the company forecasts its free cash flow will drop 19% to $11B. Buybacks are another.
- Moffett, who has cut his AT&T target by $2 to $31, is also concerned about the bill attached to the FCC's AWS-3 spectrum auction. "In order to earn even a modest return on the $38 billion bid in the auction, the Big Four carriers will need to generate an incremental $1.40 per month of wireless revenue for every man, woman, and child in America. In perpetuity."
Nov. 26, 2014, 5:33 PM
- After being prodded by the FCC on the issue, AT&T (NYSE:T) insists CEO Randall Stephenson's Nov. 12 remarks about halting fiber investments until neutrality rules are set only applied to new investments rather than ones already planned.
- Stephenson's remarks - "We can't go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed." - appeared to refer to AT&T's April announcement about bringing its U-verse GigaPower service to up to 100 cities in 21 metro areas, depending on local support. AT&T now says that plan is still on track.
- The original remarks came two days after Pres. Obama backed tough neutrality rules, and five days after AT&T announced it would be spending ~14% less on capex in 2015 than it would in 2014.
Nov. 24, 2014, 10:26 AM
- Citing higher spectrum and network investment costs, and the revenue impact of tougher price competition, Citi's Michael Rolling has downgraded Verizon (VZ -1.9%) to Neutral. AT&T (T -1.9%) is following Verizon lower.
- Rollins: "We believe the wireless industry is experiencing a great disconnect between the growth in data traffic and the growth in revenue ... We continue to fear that recent promotions create risk that the wireless industry at large may not be able to capture substantial incremental revenue from the rise in data consumption over time."
- Verizon has largely maintained its premium pricing in the face of major price cuts from T-Mobile and Sprint, but the carrier has been offering more data promos as of late. AT&T has been more willing to return fire, and has seen its wireless service growth revenue evaporate along the way.
- Last Friday: FCC auction bids hit $33B
Nov. 21, 2014, 5:22 PM
- Following 26 rounds, total bids in the FCC's AWS-3 spectrum auction have reached $33B - up from $24B two days ago. Though the auction's pace has slowed, more than $1B worth of bids were still tallied in the latest round.
- Walter Piecyk observes the average bid is now at $2.04/MHz./POP, far above his initial estimate range of $0.75-$1.25, and that it implies DISH's existing spectrum assets are worth over $73/share alone. Dish rose 2.1% today to $73.70.
- Tim Farrar thinks Dish may have bid over $10B, as it tries to both add to its spectrum portfolio (thus increasing its strategic value to carriers) and inflate the value of its existing assets. In addition to bidding against AT&T, Verizon, and T-Mobile for paired spectrum assets (the auction's main prize), Dish is expected to be the winning bidder for 15MHz. of unpaired spectrum.
- Meanwhile, the FCC has announced it will vote on rules for its 600MHz. incentive auction (due in 2016, and expected to be even bigger) in December. If approved, the rules will then be opened for public comment.
- Sticker shock? While the S&P rose 1.2% this week, AT&T (NYSE:T) fell 1.7% and Verizon (NYSE:VZ) fell 2.5%.
Nov. 19, 2014, 6:48 PM
- Bidding in the FCC's AWS-3 spectrum auction has reached $24.1B barely 24 hours after topping $14B. Through 15 rounds, $1.19B alone was bid on a 10x10 MHz. license for the NYC area.
- "While bids could suddenly slow down, the auction appears on pace to blow through the top end of our expected range," writes BTIG's Walter Piecyk. Whereas Piecyk initially forecast an average bid of $0.75-$1.25/MHz./POP, spending has already topped $1.50/MHz./POP.
- Deep-pocketed AT&T (NYSE:T) and Verizon (NYSE:VZ) are likely the "most aggressive bidders," notes JPMorgan's Philip Cusick; he suspects T-Mobile (NYSE:TMUS) is bidding more cautiously. New Street Research thinks AT&T and Verizon "will likely both go after a 10x10 MHz pair in all of the critical markets."
- Tim Farrar suspects DISH is bidding up prices on the assumption AT&T/Verizon will respond by upping their bids regardless of the cost. This morning, Piecyk estimated the auction had served to increase the value of Dish's existing spectrum to ~$2/MHz./POP from ~$1.50/MHz./POP, thereby making Dish worth $104/share rather than a prior estimate of $85/share. Dish rose 10% in regular trading.
- Though bidding is expected to slow down soon, it might not fully end for a few more weeks. Until then, the FCC won't disclose the names of winning bidders, or how much they're paying.
Nov. 18, 2014, 4:09 PM
- Following 14 rounds, total bids in the FCC's AWS-3 (high-band) spectrum auction have reached $14.18B. Bids have been placed for 1,303 of the 1,614 available licenses, and a $10.1B aggregate reserve price has been surpassed.
- AT&T (T -0.4%), Verizon (VZ -0.3%), T-Mobile (TMUS -0.3%), and Dish (DISH +4%) are among the companies bidding on the spectrum, which includes paired licenses (50GHz. altogether) in the 1.7GHz. and 2.1GHz. bands (good for high-density urban areas). T-Mobile raised debt ahead of the auction to help finance its efforts.
- The furious bidding pace highlights the strong interest U.S. carriers have in growing their spectrum portfolios to cope with rapid mobile data traffic growth. An even bigger auction for 600MHz. (low-band) spectrum was recently delayed until 2016; AT&T and Verizon will face purchase restrictions in that one.
Nov. 13, 2014, 8:46 PM
- Sony's (NYSE:SNE) new online TV package will price at $60 to $70 per month, estimates Re/code.
- It's a level that is twice what Dish Network (NASDAQ:DISH) plans to charge for a slimmer package, although one that includes ESPN.
- Programming on the Sony streaming service will feature shows from CBS, Discovery Communications, Fox, NBC, Scripps Networks, and Viacom.
- The pitch from the Japanese media giant is that cord-cutters will be drawn in by the captivating way of accessing the content through gaming consoles. A cutting-edge discovery and recommendations service for users is also highlighted by execs.
- Regulatory watch: Potential rule changes from the FCC could level the playing field for the new streamers as they work out their content deals.
- What to watch: A fragmented pay-TV landscape could benefit content producers (DISCA, CBS, FOXA, DIS, LGF, TWX, AMCX) in the short-term as competition heats up, while creating a pricing headache for cable/satellite/telco players (CMCSA, CVC, CHTR, DISH, T, DTV, VZ, TWC).
- The Netflix factor: Many media analysts consider Netflix (NASDAQ:NFLX) an add-on for consumers - instead of an either/or decision with online TV.
Nov. 12, 2014, 10:12 AM
- "We can't go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed," AT&T (T +0.2%) CEO Randall Stephenson states today at a Wells Fargo conference.
- The remarks come two days after Pres. Obama called for tough net neutrality rules. Among other things, Obama called for regulating consumer broadband under Title II (common carrier) rules, prohibiting content blocking/throttling and paid-prioritization (fast lane) deals, and (unlike prior neutrality rules) applying the prohibitions to both wireline and mobile networks.
- A skeptic might note AT&T announced on Friday (three days before Obama's neutrality remarks) it would be spending $3B less on capex next year, and that its Project VIP network expansion effort (covers both wireline and mobile investments) was ahead of schedule.
- Meanwhile, FCC chairman Tom Wheeler, who floated a neutrality proposal earlier this year that allowed paid-prioritization deals, is suggesting he disagrees with parts of Obama's proposal.
Nov. 10, 2014, 3:33 PM
- After announcing in April it would launch an aggressively-priced in-flight Wi-Fi service "as soon as late 2015," AT&T (T +0.5%) has backtracked on its plans.
- Gogo (GOGO +9.2%), whose shares plunged in response to AT&T's original announcement, is taking the news quite well. Gogo was selling off earlier today in response to the company's Q3 report.
- AT&T's about-face comes after the carrier announced (along with the Iusacell acquisition) it would only be spending $18B on capex next year, down from $21B this year and below a prior forecast of $20B.
Nov. 7, 2014, 4:22 PM
- Iusacell has 8.6M Mexican mobile subs, and a 3G network that covers 70% of the country's population (120M). AT&T (NYSE:T) is paying $2.5B in cash to buy Iusacell from parent Grupo Salinas, after accounting for debt. The deal is expected to close in Q1 2015.
- AT&T highlights Mexico's relatively low mobile/smartphone penetration rates while discussing the deal, as well as synergies with its U.S. mobile ops and recent regulatory moves meant to loosen America Movil's (NYSE:AMX) market dominance. AT&T was previously believed to be interested in Mexican assets AMX is looking to sell to appease regulators.
- AT&T "plans to expand Iusacells network to cover millions of additional consumers and businesses in Mexico." At the same time, AT&T won't be acquiring Iusacell's Total Play pay-TV/wireline broadband business. DirecTV (NASDAQ:DTV), which AT&T is set to acquire, owns 41% of local satellite TV provider Sky Mexico.
- Separately, AT&T has set a 2015 capex budget of $18B, down from 2014's $21B. The carrier declares its Project VIP network expansion project to be ahead of schedule, with the 4G expansion part largely complete.
- T +0.7% AH. AMX -0.6%.
Oct. 31, 2014, 2:55 AM
- In response to Senator Patrick Leahy's letter last week urging top ISPs to not enter "paid prioritization" deals, Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T) say they have no plans to create the Internet "fast lanes" which would hurt consumers' freedom to roam the Web.
- Verizon (NYSE:VZ) published its response to Leahy on Wednesday, also asserting that it has no plans for "fast lanes".
- The pledges come after the FCC proposed its "net neutrality" rules that prohibit ISPs from blocking content, but suggests allowing some "commercially reasonable" paid prioritization deals.
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AT&T Inc, through its subsidiaries and affiliates, provides wireless and wireline telecommunications services in the United States and internationally. The Company has three reportable segments: Wireless, Wireline, and Other.
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