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AT&T Inc. (T)

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  • Jul. 8, 2014, 2:43 AM
    • AT&T (T) says it will be the first U.S. wireless carrier to sell LG's (LGEIY) smartwatch - known as the "G Watch". The device was made in partnership with Google (GOOG, GOOGL), and will be available for pre-order starting on July 8 for $299.
    • Demand for wearable devices is skyrocketing. Juniper Research forecasts the value of the wearable device market this year at $1.5B, up from $800M in 2013.
    | 8 Comments
  • Jul. 1, 2014, 7:18 PM
    • Even if AT&T's (T) ARPU drops by a modest $1.50 in 2H14, it could still be down 10% Y/Y and set to fall below $60 in 2015, notes BTIG's Walter Piecyk. AT&T is a month removed from warning it doesn't expect any wireless service revenue growth in Q2 due to ARPU pressure caused by its participation in a T-Mobile-driven price war.
    • AT&T has responded to T-Mobile in part by cutting prices and removing phone-leasing requirements for Mobile Share plans. The response has been positive - AT&T expects ~2/3 all postpaid subs to be on no-subsidy Mobile Share plans by year's end - but has come at the cost of lower ARPU and (due to phone leases) higher equipment spend.
    • Moreover, with Piecyk expecting 75% of Mobile Share subs to be on 10GB or higher plans by the end of 2015, he thinks AT&T will be pressured to "find something to drive incremental growth that will move those customers to higher usage plans."
    • The story is different for Verizon (VZ), which has stuck to a premium pricing strategy and placed tougher leasing hurdles. The strategy has hurt Verizon's subscriber adds, but also led to less ARPU pressure.
    • Piecyk thinks Verizon can still see low- to mid-single digit service revenue growth, whereas AT&T is likely to see a 5%+ Y/Y decline later this year.
    • AT&T, of course, is about to lower its mobile dependence with a huge acquisition.
    | 8 Comments
  • Jun. 30, 2014, 1:03 PM
    • Carlos Slim is paying $5.6B to buy AT&T's (T +0.1%) 8.3% stake in America Movil (AMX +0.3%), according to SEC filings. With the stake worth $6.5B based on AMX's current market cap, Slim is getting a sizable discount in exchange for preventing AT&T from having to sell the shares through a public offering that could depress prices.
    • The deal makes good on a promise by AT&T to unload the stake, and thus eliminate a conflict of interest and potential regulatory hurdle as the company gets set to buy DirecTV.
    • DirecTV has 11.9M Latin American subs, and AT&T (with the help of DirecTV's spectrum) plans to use it to offer TV/broadband bundles in the region.
    • Previous: Slim to buy AT&T's America Movil stake
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  • Jun. 27, 2014, 3:54 PM
    • Carlos Slim plans to buy AT&T's (T +0.4%) 8.3% stake in America Movil (AMX +4.4%). After accounting for the spike in AMX shares that has followed the news, the stake is currently worth $6.4B.
    • The stake includes 24% of AMX's voting shares; its purchase further solidifies Slim's hold over the giant Latin American carrier as it continues expanding into Europe.
    • AT&T announced in May it would sell its AMX stake to keep regulators happy as it acquires DirecTV, whose Latin American reach is substantial and set to get bigger post-acquisition. The sale will also help Ma Bell pay for the DirecTV deal's $14.6B cash component.
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  • Jun. 27, 2014, 12:48 PM
    • AT&T Inc. (T) declares $0.46/share quarterly dividend, in line with previous.
    • Forward yield 5.23%
    • Payable Aug. 1; for shareholders of record July 10; ex-div July 8.
    | 9 Comments
  • Jun. 17, 2014, 8:45 AM
    • Amazon's (AMZN) smartphone which will be unveiled this Wednesday will only be carried by provider AT&T (T). The deal extends the two's relationship, as AT&T also provides service for the Kindle and e-readers.
    • The phone is rumored to be distinguished by its holographic display, and the company plans to start shipping out the phones by the end of September.
    | 18 Comments
  • Jun. 10, 2014, 2:15 AM
    • AT&T (T) settled a lawsuit with Al Jazeera over the refusal to carry a news channel launched by the latter last August in its U-verse pay television service. AT&T refused due to a dispute over the terms of the agreement.
    • Al Jazeera sued the telecom giant in Delaware's Court of Chancery, claiming AT&T had broken and terminated their contract.
    | 5 Comments
  • Jun. 4, 2014, 2:10 PM
    • A day after AT&T (T -0.7%) sold $2B worth of 30-year U.S. bonds to help pay for the DirecTV (DTV -0.1%) deal, Bloomberg reports the company is selling $2.9B worth of euro-denominated bonds with 10 and 20-year maturities.
    • Assuming no funds are used to repurchase debt, the offerings stand to raise AT&T's debt load to the ~$85B range. DirecTV, meanwhile, has $20.8B of its own debt, partly offset by $5B in cash/investments.
    • Separately, in an 8-K outlining its case for the acquisition, AT&T declares content costs eat up 60% of U-verse's revenue, and that DirecTV's scale will lower those costs by ~20%. $1.6B/year worth of total synergies are expected 3 years after the deal closes.
    • AT&T also claims the deal will allow it to provide gigabit fiber services (previous) to 2M more locations, and that it plans to offer TV/broadband bundles in Latin America with the help of DirecTV's spectrum, which covers 43M homes in Brazil, Argentina, Peru, and Colombia.
    • Previous: AT&T/DirecTV hinges on Sunday Ticket
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  • Jun. 3, 2014, 4:41 PM
    • AT&T (T) has sold $2B worth of 30-year bonds yielding 4.8%, or just 140 bps more than comparable Treasurys.
    • Analysts think Ma Bell could sell as much as $7.5B in debt to help pay for the DirecTV deal, which has a $14.6B ($28.50/share) cash component.
    • As it is, AT&T had $79.9B in debt at the end of Q1, offset by just $7.2B in cash/investments. 2014 free cash flow is expected to total $11B, and dividend payments are set to be around $9.5B.
    • Previous: AT&T slips following guidance
    | 2 Comments
  • Jun. 3, 2014, 2:48 PM
    • AT&T's (T -0.6%forecast for 2014 EPS growth to be at the low end of a prior mid-single digit growth is overshadowing its revenue guidance hike.
    • Also: AT&T says it expects no wireless service revenue growth in Q2, as a T-Mobile-fueled price war pressures its ARPU. Service revenue grew 2.2% Y/Y in Q1, and 4.8% in Q4.
    • Q2 wireless service EBITDA margin (already under pressure in Q1) to be dinged in Q2 by service revenue weakness and higher equipment sales; the latter stems from strong adoption of AT&T's Next smartphone upgrade plans. The margin is expected to be above 40% from Q2-Q4; it was at 45.4% in Q1.
    • One bright spot: Q2 wireless postpaid net adds are expected to top 800K, after coming in at 625K in Q1. Postpaid churn is expected to be at 0.95% or lower, down from 1.02% a year ago.
    • Next smartphone sales are expected to rise to 3.2M from Q1's 2.9M, and make up ~50% of total sales. Roughly half of all postpaid smartphone subs are now on subsidy-free Mobile Share Value plans, and ~2/3 are expected to be on one by year's end.
    | 3 Comments
  • Jun. 3, 2014, 7:53 AM
    • The Project VIP network transformation plan is ahead of schedule, with AT&T's (T) 4G LTE network now covering 290M people and VIP's broadband build expected to have fiber to more than 400K new business customer locations by the end of Q2.
    • The company raises FY14 revenue growth guidance to 5% from 4%, and reaffirms guidance for stable consolidated margins, adjusted EPS at the low-end of the mid-single digit range, capital expenditures in the $21B area, and free cash flow around $11B.
    • Shares +0.7% premarket
    • Source: Press Release
    | 5 Comments
  • Jun. 2, 2014, 4:43 PM
    • Jefferies reports AT&T (T -0.1%) significantly cut its wireline capex starting last month.
    • It thinks many companies could be affected, including equipment vendors Alcatel-Lucent (ALU -2.2%), Ciena (CIEN -3.9%), Juniper (JNPR +0.2%), and Adtran (ADTN -5.1%), and component vendors JDS Uniphase (JDSU -2%) and Finisar (FNSR -0.7%).
    • As its is, AT&T's 2014 capex budget ($21B) is down $200M from 2013's spending level. Moreover, the carrier's huge mobile infrastructure needs and the DirecTV deal could be motivating it to cut wireline spend.
    • Also: AT&T may be looking to keep capex down ahead of the full rollout of Domain 2.0, an initiative meant to improve network flexibility, lower costs, and cut provisioning times through the embrace of software-defined networking (SDN) and network functions virtualization (NFV).
    • MKM has argued Domain 2.0 will be a negative for Cisco, but a positive for Ciena and Finisar, among others.
    | 8 Comments
  • May. 29, 2014, 4:15 AM
    • Sprint (S) Chairman Masayoshi Son reasons that the rise in telecom and cable mergers should allow his company to buy rival T-Mobile (TMUS). Three big mergers have taken place in recent months with Verizon (VZ) acquiring Vodafone (VOD) for $130B, Comcast (CMCSA) buying Time Warner Cable (TWC) for $45B, and the AT&T (T) purchase of DirecTV (DTV) for $49B.
    • "Access to the Internet is currently dominated by three giants with no sizable competitor," says Son.
    • Although the company has not yet made a formal bid on T-Mobile, it looks to lay the framework for a future purchase.
    • Antitrust authorities have previously frowned on such a deal, as it would cut the number of national competitors in the wireless industry to three from four.
    | 9 Comments
  • May. 20, 2014, 9:55 AM
    • "I know there are reports out there that we are talking to Dish (DISH -2.3%). I can tell you now, that is someone's fantasy ... I don't think owning a satellite company is something I'm interested in at this point," says Verizon (VZ +0.1%) CEO Lowell McAdam in response to reports his company has held talks with Dish.
    • As it is, there was plenty of skepticism Verizon, which just took on more than $60B in debt to help pay for Vodafone's Verizon Wireless stake, would turn its sights on Dish in response to AT&T's (T -0.8%) deal to acquire DirecTV.
    • McAdam states Verizon's current focus is on rolling out OTT (Web-based) programming. The company bought out Intel's would-be Web TV unit in January, and has since said it's in talks with content providers to offer a Web/mobile TV service.
    • If/when Verizon's service launches, it'll likely face competition from Dish, which plans to launch a Web TV service aimed at cord-cutters by year's end. It might also compete against AT&T,  which hopes to launch a Web TV offering within 12-18 months of the DirecTV deal's closing.
    • For each company, signing up content providers terrified of upsetting traditional pay-TV clients (and thus putting affiliate fees at risk) remains a challenge. Dish, for its part, has managed to get Disney/ESPN on board.
    | 2 Comments
  • May. 19, 2014, 10:00 AM
    • If DirecTV's (DTV -2.2%) NFL Sunday Ticket deal isn't renewed on terms similar to the ones discussed, AT&T (T -2.1%) can walk away from the deal, AT&T discloses in an 8-K. DirecTV CEO Mike White says he's confident Sunday Ticket will be renewed by year's end.
    • "The last six years for AT&T have been about data, the future is about delivering video at scale," declares AT&T CEO Randall Stephenson. He states AT&T is only paying for 30% of the deal in cash to keep its powder dry. Among other things, Ma Bell plans to spend up to $9B at next year's huge low-frequency spectrum auction, and will also participate in an auction for higher-frequency AWS spectrum.
    • Also: 1) AT&T plans to grow its grow its broadband footprint by 15M homes (largely in rural areas), in part by offering fixed wireless services. 2) White says DirecTV is looking for M&A opportunities in Latin America. 3) AT&T promises DirecTV's services "will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers" for 3 years. 4) Cost synergies are expected to total $1.6B/year.
    • AT&T and DirecTV are both lower. DirecTV shareholders get 1.905 AT&T shares for each DirecTV share if AT&T trades below $34.90 at closing time, and 1.724 shares if it trades above $38.58. They get an equity payoff equal to $66.50/share if AT&T trades between those two figures.
    • More on AT&T/DirecTV
    | 7 Comments
  • May. 19, 2014, 1:56 AM
    • AT&T (T) intends to sell its $6B, 8.4% holding in América Móvil (AMX) in order to avoid conflicts of interest from its proposed $48.5B acquisition of DirecTV (DTV) and "facilitate the regulatory approval process in Latin America."
    • AT&T's representatives on América Móvil's board are set to resign.
    • The deal will give AT&T a large presence in a region in which DirecTV has 18M customers, making it one of the largest pay-TV operators in Central and South America - along with América Móvil.
    | 4 Comments
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Company Description
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.