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When To Buy AT&T

Jul. 12, 2017 9:10 AM ETAT&T Inc. (T)148 Comments
Dividend Stream profile picture
Dividend Stream


  • AT&T is back down near its low from November of last year.
  • Shares trade at a slight discount to average valuation.
  • I believe income investors should wait for a substantial discount, due to industry uncertainty.

AT&T (NYSE:T) is a company I've been avoiding for awhile now. Back in October I recommended selling AT&T on news that the company was making a massive acquisition of Time Warner Inc (NYSE: TWX). In my opinion that acquisition was too much after news that AT&T was already acquiring DirecTV. Furthermore, the telecom industry has been in upheaval, with all content going to the mobile internet and the old restrictions of cable and telecommunications becoming less and less acceptable to consumers.

I continue to believe that this upheaval is something AT&T will have to adapt to, and it is already behind its disruptive competitor, T-Mobile USA (TMUS). This upheaval has forced AT&T to offer unlimited data plans to customers because it was loosing market share to T-Mobile. The effects of unlimited data will be felt at AT&T: namely, accelerating demand for spectrum and more pressure on AT&T's network, which wasn't really set up for unlimited data use in the first place.

Shares have declined significantly since my latest article on AT&T back on April 26th. The telecom industry may be up in the air right now, but at some point there will be a good entry point into AT&T. This article looks at AT&T's investment prospects today.

Falling shares

Courtesy of Google Finance.

As you can see, shares of AT&T dropped down close to their lows back in November of last year, at the height of concerns over the sprawling series of acquisitions.

To further complicate things, wireless revenue dropped from $18 billion in the first quarter of last year to $17.2 billion this year, and overall revenue dropped from $40.5 billion to $39.4 billion. I've spoken about this on previous articles, but suffice it to say that this was due to a net loss of 190,000 postpaid phone subscribers. EPS ticked higher, from 72 cents in 1Q '16 to 74

This article was written by

Dividend Stream profile picture
Dividend Stream is a contributing columnist for Real Money and TheStreet.com. He has been writing for Seeking Alpha since 2012.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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