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AT&T Inc. (T)

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  • May. 13, 2014, 11:00 AM
    • Bloomberg and WSJ reports suggesting AT&T (T -1.3%) is close to a mega-deal for DirecTV (DTV +0.7%) (possibly worth over $66B after factoring net debt) are leading investors to bet Ma Bell won't be interested in making a bid for Vodafone (VOD -2.2%), something the company has been frequently rumored to be interested in exploring.
    • AT&T CEO Randall Stephenson has already said "the window may be closing" on acquiring European assets, and has suggested he isn't thrilled with Vodafone's efforts to grow its wireline footprint via M&A.
    • For his part, Vodafone CEO Vittorio Colao has hinted he's open to a deal, but has also made it clear his company will continue its wireline expansion strategy in the interim.
    • AT&T, which didn't sell off following prior DirecTV reports, is off moderately today, as the Street expresses some concern over the potential $100/share price tag mentioned in Bloomberg's report.
    • DirecTV (DTV +0.7%), meanwhile, has pared its AH gains and is now only trading near $88. Worries about regulatory approval might be playing a role; a Bloomberg source states AT&T and DirecTV are expecting a 12-month regulatory process for the deal.
    | 7 Comments
  • May. 12, 2014, 5:10 PM
    • Bloomberg reports AT&T (T) is in "advanced talks" to acquire DirecTV (DTV) for ~$100/share - a 15% premium to DirecTV's Monday close, and a 29% premium to where shares traded before the WSJ's May 1 report about deal talks.
    • The acquisition price values DirecTV at $51B, or over $66B after factoring net debt.
    • Bloomberg adds that under discussed plans, DirecTV CEO Mike White plans to retire after 2015.
    • DTV now +5.6% AH to $92.
    • Earlier: AT&T/DirecTV deal could reportedly be announced in two weeks
    | 16 Comments
  • May. 7, 2014, 4:09 PM
    • Dow Jones reports DirecTV (DTV +8%) is talking with Goldman and other advisors to weigh a possible merger with AT&T (T +0.8%).
    • The report led shares to spike shortly before the close. The WSJ previously reported AT&T has approached DirecTV about a deal.
    | 9 Comments
  • May. 1, 2014, 8:01 AM
    • Thanks to aggressive pricing and a slew of promotions, T-Mobile (TMUS) added 1.3M branded postpaid subs (1.2M phone subs), 465K branded prepaid subs, and 600K non-branded subs in Q1. The branded postpaid figure dwarfs Verizon's (VZ) 539K and AT&T's (T) 625K - the difference in phone adds is even larger - and compares with a net loss of 333K for would-be suitor Sprint (S).
    • Regulators mulling a Sprint/T-Mobile tie-up are doubtlessly paying attention, and the same goes for AT&T and Verizon: The former has responded more aggressively to T-Mobile's price cuts thus far than the latter.
    • Thanks to the strong Q1 numbers, which come after T-Mobile added 1.645M total subs (869K branded postpaid) in Q4, the carrier now expects 2.8M-3.3M branded postpaid net adds in 2014, up from a prior 2M-3M. Cash capex is still expected to be in a range of $4.3B-$4.6B.
    • At the same time, T-Mobile's strategy continues taking a near-term toll on its bottom line: Adjusted EBITDA fell 26% Y/Y to $1.09B, and T-Mobile has cut its full-year adjusted EBITDA guidance to $5.6B-$5.8B from $5.7B-$6B. Adjusted EBITDA margin fell 400 bps Q/Q to 20%.
    • Service revenue rose 4.5% Y/Y to $5.34B. Branded postpaid churn fell 20 bps Q/Q and 40 bps Y/Y to 1.5% (a new record). ARPU fell $0.69 Q/Q to $50.01. "Simple free cash flow" (adjusted EBITDA - cash capex) was $141M, down from $357M in Q4 and $239M a year ago.
    • TMUS +7.6% thanks to the sub adds and a Bloomberg report stating Sprint has lined up financing for a bid. Sprint +6.2%. T-Mobile parent Deutsche Telekom (DTEGY) is up 2.9% in Frankfurt.
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  • Apr. 28, 2014, 4:32 PM
    • AT&T (T) announces plans to offer U.S. in-flight Wi-Fi service courtesy of a 4G air-to-ground network leveraging spectrum the carrier already owns.
    • Ma Bell says the service will be "available as soon as late 2015," and doesn't expect capex related to the effort to be "material."
    • GOGO investors aren't pleased; shares of the in-flight Wi-Fi leader are down 19.5% AH.
    | 24 Comments
  • Apr. 23, 2014, 12:46 PM
    • Though investors aren't thrilled with AT&T's (T -3.3%) Q1 wireless numbers, Wells Fargo (Outperform) calls them "big time solid." The firm notes net adds and churn were better-than-expected, and thinks Q1 results suggest the telco's 2014 guidance is "quite achievable."
    • Morgan Stanley (Equal-Weight) is less charitable: It estimates 500K of AT&T's 625K postpaid net adds came from tablets, and notes cheaper Mobile Share plans - launched following intense price competition and promotional efforts from T-Mobile (TMUS -3%) - led wireless service revenue growth to fall.
    • Canaccord observes strong uptake for Next upgrade plans boosted subscriber adds, but expects the trend to moderate. The firm has cut its 2014 EPS estimate to $2.69 from $2.78 (consensus is at $2.71).
    • On the CC (transcript), management talked up the ability of Next adoption to lower subsidy expenses, and mentioned U-verse revenue is now on a ~$14B/year run rate.
    • Strong U-verse growth has narrowed AT&T's wireline revenue declines, albeit while pressuring margins. The company promises wireline margins (-110 bps in Q1 to 10%) will improve in 2016.
    | 2 Comments
  • Apr. 22, 2014, 4:22 PM
    • AT&T (T) had 625K postpaid net adds in Q1 (313K via branded tablets), up from 566K in Q4. Connected device net adds totaled 693K; prepaid and reseller net losses respectively totaled 50K and 206K.
    • However, wireless service revenue rose just 2.2% Y/Y, down from 4.8% in Q4 (did price cuts play a role?). Meanwhile, wireless op. margin only rose 30 bps to 28.3% after growing 690 bps in Q4.
    • Churn was at 1.39% vs. 1.43% in Q4 and 1.38% a year ago. Smartphones now account for 78% of AT&T's postpaid base, up from 77% in Q4 and 72% a year ago. AT&T's Next upgrade program saw 2.9M sign-ups. That contributed to a 52% Y/Y increase in equipment sales (pressured margins).
    • Total wireless subs +8% Y/Y to 116M. Postpaid subs +4% to 73.3M.
    • Wireline revenue fell 0.4% Y/Y vs. 1.4% in Q4; op. margin fell 110 bps to 10%. 634K and 201K U-verse Internet and TV subs were added vs. 630K and 194K in Q4. Total U-verse revenue rose 29% Y/Y.
    • Wireline voice connections -11% Y/Y to 27.7M, broadband connections nearly flat at 16.5M, video connections +19% to 5.7M.
    • $1.2B was spent on buybacks, down from $1.9B in Q4. AT&T is reiterating full-year capex and free cash flow guidance of $21B and $11B, respectively.
    • Q1 results, PR
    | 3 Comments
  • Mar. 10, 2014, 12:02 PM
    • As European 4G investments ramp, "the window may be closing" on acquiring continental wireless assets, AT&T (T -0.4%) CEO Randall Stephenson stated last week at a Morgan Stanley conference (transcript). At the same time, he argued "there are still other opportunities" in Europe, such as those tied to the development of "global" SIM cards that can work with any type of device worldwide.
    • Those remarks were highlighted by a weekend FT column declaring Stephenson had "poured more cold water." on hopes of an AT&T bid for Vodafone (VOD -4.2%). The AT&T chief has already been reported to have told investors further cable acquisitions by Vodafone would complicate a bid.
    • Meanwhile, Vodafone CEO Vittorio Colao states recently-acquired Kabel Deutschland will act as the "core" of a wireline business in Germany and possibly other countries. He adds Vodafone's wireline ops will expand to include security, Web hosting, and entertainment services (previous).
    • Colao was cryptic when asked about Vodafone's reported efforts to acquire Spanish cable giant ONO. "We'll see what happens."
    | 7 Comments
  • Mar. 7, 2014, 11:19 AM
    • Sources tell Reuters (translation) Vodafone (VOD -2.8%) has raised its bid for Spanish cable giant ONO, and has reached a preliminary deal with ONO shareholders collectively possessing a controlling stake.
    • No word on the specific offer price. Vodafone was previously reported to have made a rejected €7B ($9.6B) bid for ONO.
    • One source states Vodafone plans to formally present its offer before ONO's board meets on March 13 to approve recently-announced plans to pursue an IPO.
    • Vodafone is selling off on the report. A successful Vodafone bid for ONO, coming on the heels of its $14.2B Kabel Deutschland acquisition, could lower the odds AT&T (T +0.3%) will make an offer for the company once its 6-month waiting period ends. AT&T CEO Randall Stephenson has reportedly told investors further cable acquisitions by Vodafone would complicate a deal.
    | 1 Comment
  • Feb. 24, 2014, 6:41 PM
    • Verizon (VZ) and AT&T (T) have confirmed that they, too, are talking with Netflix (NFLX +3.4%) about direct peering deals. Verizon CEO Lowell McAdam says his company's talks with the streaming giant have been going on for about a year.
    • Netflix shares closed the day with strong gains, as analysts argued direct peering deals such as the one just reached with Comcast could end up having a neutral or even positive impact on Netflix's bandwidth costs, given the company will no longer have to pay intermediaries such as Cogent (CCOI -6.8%).
    • Dan Rayburn: "It should actually be cheaper for Netflix to buy direct from Comcast, and they also get an SLA, which also improves quality ... While I don’t know the price Comcast is charging Netflix, I can guarantee you it’s at the fair market price for transit."
    • Others aren't convinced direct peering deals are a positive. The Washington Post: "Cogent has many competitors. Verizon's FiOS service does not. If companies like Cogent are squeezed out of business, it will make these already powerful network owners even more powerful."
    • GigaOm: "These agreements aren’t transparent ... rates could go up over time, and they essentially act as a tax on the Internet."
    | 5 Comments
  • Feb. 3, 2014, 12:02 PM
    • Following a Q4 in which it saw disappointing net subscriber adds and intensifying competition from T-Mobile (TMUS -1%), AT&T (T -3.4%) has launched aggressively-priced plans for families looking to share 10GB/month of data between accounts while receiving unlimited talk/text.
    • A family with just two smartphones still has to pay $130/month, but each additional smartphone costs only $15/month. One important catch: Like AT&T's recent shared data plan discount and a $200 credit provided in its T-Mobile promotion, the family plans require users forgo traditional smartphone subsidies. AT&T's efforts to pare subsidy expenses are a major reason its wireless op. margin rose 690 bps Y/Y in Q4.
    • AT&T is underperforming on a bad day for equities, as are Verizon (VZ -3.4%) and Sprint (S -4.3%). While AT&T, Sprint, and (especially) T-Mobile have launched major discounts and promotions in recent months, Verizon has maintained its premium pricing strategy, betting its coverage and service quality will allow it to continue delivering industry-leading subscriber adds and margins. But fears are growing Big Red increasingly has no choice but to return fire.
    • AT&T's latest move comes days after the carrier announced a $100 credit for each new line opened by a new or existing subscriber.
    | 10 Comments
  • Jan. 29, 2014, 12:22 PM
    • Though it recently gave up the opportunity to make a bid for Vodafone (VOD +1.9%) within the next six months, AT&T (T -1.6%) remains interested in a possible deal for the giant international carrier, sources tell Bloomberg.
    • The news service adds AT&T's recent decision came after U.K. regulators demanded the company either deliver a formal bid for Vodafone within 28 days on account of ongoing reports, or walk away for six months. Ma Bell reportedly chose the latter in order to avoid "negotiating under such a tight deadline and because of the possibility of exemptions from the moratorium."
    • Vodafone shares have caught a bid on the report, which comes a day after AT&T beat Q4 estimates, but also reported soft subscriber adds and forecast a ~19% 2014 free cash flow decline.
    | 4 Comments
  • Jan. 27, 2014, 3:43 AM
    • Vodafone's (VOD) shares have slumped 6.4% in London after AT&T (T) said it has no intention of making an offer for the U.K. telecom operator.
    • AT&T made a statement to the London Stock Exchange in response to a request from the the U.K.'s Takeover Panel following much speculation that the U.S. provider was interested in Vodafone after the latter agreed to sell its 45% stake in Verizon Wireless to Verizon for $130B last year.
    • The statement means that AT&T can't make an offer for Vodafone for the next six months unless the British company agrees to it, another firm makes a proposal, or the authorities decide that circumstances have changed materially. (PR)
    | 4 Comments
  • Jan. 9, 2014, 2:42 PM
    • AT&T (T -1.9%), Verizon (VZ -2%), and Sprint (S -4.4%) are each selling off after T-Mobile USA (TMUS -1.1%) announced a credit program for defecting mobile subscribers - up to $300 in credit for trading in a phone, buying an approved T-Mobile phone, and signing up for a postpaid plan, and up to $350 to pay off termination fees - that was even more aggressive than expected. Sprint is also being pressured by a Deutsche downgrade to Hold.
    • FBR's David Nixon likely speaks for many on the Street when he expresses concerns AT&T, Verizon, and Sprint "will be forced to react to the move." Fears that T-Mobile's efforts will pressure industry margins and increase churn have already been running high. AT&T announced a smaller promotion (up to $450 in credit) last week.
    • Nixon also says CES feedback points to "surprising confidence from T-Mobile US that a merger with Sprint could be approved if argued on the right basis." T-Mobile CEO John Legere didn't rule out a future acquisition by Sprint yesterday, though he did suggest T-Mobile's brand would be maintained post-acquisition. Legere also took quite a few shots at his rivals.
    • Meanwhile SoftBank (SFTBF, SFTBY) CEO Masayoshi Son isn't mincing words regarding Sprint's challenges. In a Nikkei column, Son blasts Sprint's marketing efforts (all of the company's ad agencies have been fired), and says the carrier "has gotten used to being a loser."
    | 9 Comments
  • Dec. 17, 2013, 7:38 AM
    • Frontier Communications (NASDAQ:FTR) buys AT&T's (NYSE:T) wireline residential and business service that serves Connecticut for $2B in cash and related assets.
    • The company expects the transaction to be accretive in the first year following the closing which is targeted for the second half of 2014 following regulatory approvals.
    • FTR +13.8% premarket.
    | 2 Comments
  • Dec. 4, 2013, 9:42 AM
    • AT&T (T -1.4%) has been cut to Neutral by JPMorgan.
    • Electronic Arts (EA +0.8%) has been upgraded to Neutral by Hilliard Lyons.
    • Flextronics (FLEX -1.7%) has been cut to Sell by Goldman.
    • CommScope (COMM -0.1%) has received ten bullish ratings, and just one neutral one, on underwriter coverage day.
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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.