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Fiserv's Solution for AT&T

Zacks Equity Research

Recently, Fiserv, Inc. (FISV) entered into a multi-year, sole provider contract with AT&T, Inc. (T). Per the agreement, the company will be engaged in providing its CheckFree RXP walk-in bill payment solution to the Wireline clients in 13 additional states. Now, with this contract, clients in 22 states will be able to avail of walk-in bill payment facility.

In addition, the company will also continue to provide its bill payment services to AT&T’s Long Distance, Mobility and U-verse clientele across 48 states. These user-friendly solutions by Fiserv would make the entire bill payment system much faster and secured for AT&T’s clients. They can now easily pay Wireline, Long Distance, Mobility and U-verse bills to any CheckFreePay agent through cash, checks or money orders.

This agreement has strengthened the company’s long-term association with AT&T. We believe Fiserv’s advanced platform would help AT&T to ameliorate its service standards and serve its clients more effectively.

Various strategic contract wins hold future pledge for Fiserv. The company recently confirmed winning contract from Intracoastal Bank for providing its Premier bank solutions and other wide range of banking services. We believe that these agreements are likely to heighten the company’s market share in future.

However, even with such moves, it is always wise for Fiserv to be extra cautious of competitive strides in the industry. The company’s primary competitors include big players such as Mastercard Incorporated (MA), Fidelity National Information Services, Inc. (FIS) and Total System Services, Inc. (TSS). Moreover, Fiserv faces an ongoing threat from billers and self-sufficient financial institutions that develop and use their own electronic payment transactions and Internet banking solutions.

The current Zacks Consensus Estimates for Fiserv, Inc. are $1.27 and $5.19 for the third quarter of 2012 and for 2012, respectively. The estimates represent a year-over-year growth of 9.82% for the third quarter and 13.23% for 2012. We currently have a long-term ‘Neutral’ recommendation for Fiserv. The stock carries a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating.

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