AT&T Inc. (T) provided data on subscriber addition for the second quarter of 2013. The update is encouraging with solid growth in U-verse broadband and TV subscription. Further, the company also projected net addition of approximately 500,000 in its post-paid wireless services. Moreover, management continues to expect full-year revenue growth of over 2%.
The company stated that it is experiencing a surge in its wireless business, in particular the post-paid segment, from promotional strategies that it had undertaken. These initiatives have resulted into increased smartphone upgrades along with higher sales from customer additions.
Further, AT&T also highlighted the increase in its liquidity position through proceeds received from YP Holdings LLC distribution, in which it holds minority interest, and by divesting 7% of its stake in America Movil (AMX).
It was also reported that during the second quarter, AT&T completed its second 300 million-share repurchase authorization. The company also plans to begin a new share repurchase program of 300 million shares approved early this year. Complete details on the company’s financial performance for the ongoing quarter will be released after the closing bell on Jul 23.
In the coming days, we expect AT&T to significantly benefit from its Project Velocity IP. Under this project, AT&T will invest $14 billion in the coming three years to considerably expand the wireless (investment of $8 billion) and wireline (investment of $6 billion) Internet Protocol (IP) broadband networks.
The company targets to extend wireline IP network to nearly 57 million customer locations (including both customers and small businesses) – covering 75% of AT&T’s wireline service area – by the end of 2015. This project underlines the company’s efforts to meet the growing demand for high-speed Internet. We believe that this investment program will provide AT&T with a high-potential growth platform, leading to higher revenues and improved earnings per share over the near term.
AT&T, currently has Zacks Rank #3 (Hold)
Telefonica Brasil, S.A. (VIV) and TELUS Corporation (TU) with Zacks Rank #2 (Buy) are the two stocks we believe are worth considering in the telecom sector.
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