Growth Catalysts for AT&T
Thu, Aug 19, 10:15 AM ET, by eDividendStocks.com
In the first part of our interview with AT&T Senior Vice President Brooks McCorcle, we focused on why dividend investors would consider AT&T over Verizon (VZ: 30.05 -0.33%). In the second part of this interview, we look at some of the growth catalysts for AT&T (T: 27.242 -0.14%) and the potential impact of losing their exclusive agreement to sell the Apple (AAPL: 253.156 +0.03%) iPhone. What growth catalyst should investors be aware of that could help propel AT&T's stock price back to the levels we saw in 2007 when the stock was trading above $40 per share? I can't comment on where AT&T's stock price will be in the future, but I'm happy to discuss our growth drivers. We look for growth in three key areas: (1) mobile broadband and advanced wireless services, (2) video, led by our AT&T U-verse service, and (3) advanced business solutions. All of these areas are growing well today, and we are confident they have excellent potential in the years ahead. Mobile data revenues grew better than 27% in the most recent quarter, U-verse revenues exceeded $1 billion, and our strategic business services revenues were up a strong 15.8 percent. The wireless data revolution is still young, so we see substantial upside there. And wireless connected devices – non-traditional connections for things like eReaders and GPS systems – are an increasingly important area of growth. Millions of these connected devices are being added to our network; in fact, AT&T leads in this space. On top of that, we're very encouraged by the growth we're seeing in our AT&T U-verse TV service. Deployment is on track to reach more than 30 million living units by the end of next year across 22 states and we already have more than 2.5 million customers. And as the economy turns, we expect improvement in our Enterprise business, which will add to our growth trajectory. In fact, in the second quarter, we saw business IP data revenues grow 9.1 percent and we saw revenue growth of 15.8 percent in strategic business services, which include Ethernet, VPNs, hosting, IP conferencing and application services. The popularity of the Apple iPhone has certainly contributed to the success of AT&T's wireless segment with 3.2 million iPhones activated last quarter. However, many investors are concerned that AT&T will lose their status as the exclusive carrier for the iPhone as early as next year. Are those concerns overblown? AT&T is device rich. In fact, we offer at least 18 smartphones with advanced operating systems. We have made it a priority to always have the industry's best device lineup, and we intend to maintain that edge. The iPhone will continue to be an important part of our device lineup, and we plan to continue offering an array of Apple products. Our network offers a number of important advantages to wireless customers, starting with speed. iPhone customers are high-end users and speed matters to them, and we have the fastest 3G network, and it's getting even faster with recent HSPA 7.2 upgrades and the planned HSPA+ upgrade later this year. We also provide our customers the ability to make voice calls and use the Internet at the same time, which is an important differentiator considering how integrated devices like the iPhone are used. Just as important, our service plan offerings provide our customers incentives to stay with us. More than 80 percent of our postpaid subscribers are on Family Talk® and/or business plans, and moving to another carrier would involve moving the whole group. AT&T is also the only carrier to offer Rollover minutes, which customers lose when they move to another carrier. These both tend to make our customers more loyal. All of this adds up to a compelling value proposition for our customers. And, as we said in a recent SEC filing, while we could see increased customer churn and lower postpaid customer additions, we don't expect the end of any of our current exclusive arrangements to have a material negative impact on our wireless segment income, consolidated operating margin or cash from operations. With Wall Street expecting little to no revenue growth from AT&T in the next couple of years, should investors treat AT&T more like a high-quality bond with a 6% yield? Wall Street is expecting top-line growth, and we are very focused on delivering it. When you look at our results this year, even in a difficult economic environment, we offer investors revenue growth, expanding margins, double-digit earnings growth potential and solid cash flow. And we are well positioned to lead in the communications industry's most important growth areas for the future – mobile broadband, advanced business solutions and next-generation TV. Recommend This Article To Others:
SDI Glossary: "price" Definition
This Article's Word Cloud:
Apple
Wall
advanced
another
areas
business
carrier
continue
customers
data
device
devices
exclusive
fact
growth
have
high
iPhone
impact
important
investors
like
look
million
more
network
next
offer
operating
part
percent
potential
quarter
recent
revenue
revenues
second
service
services
stock
than
that
their
this
verse
which
will
wireless
with
year
More articles: 1 2 3 4 5 6 7 next »
| 
RSS
