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AT&T Boosts Network Operations With Linde Contract Extension

Zacks Equity Research

AT&T Inc. T recently extended its long-standing contract to serve Linde plc LIN with seamless global communications network for five additional years. The avant-garde network provided by the tech behemoth has been specifically designed to strengthen and streamline Linde’s on-going business transformation worldwide, thereby improving its productivity. Markedly, the latest deal seems to be the call of the hour as more companies are transitioning to a digital ecosystem to avail ultra-fast speed, lower latency and better connectivity solutions.

Recognized as one of the pioneers of serving end-markets with high-quality solutions, Linde is an Ireland-based engineering company that delivers state-of-the-art gas processing solutions to support emissions reduction and customer expansion. The global industrial company also supports numerous industries such as food & beverage, electronics, manufacturing, chemicals and healthcare with its diversified portfolio of cutting-edge technologies and services. Interestingly, the company was formed with the merger of Praxair and Linde AG in 2019. Impressively, it is believed to be the world’s largest industrial gas company in terms of revenues as well as market share.

Per the contract, the Dallas, TX-based wireless service provider has been entrusted to provision and streamline connectivity solutions for Linde Group businesses as well as revamp its networking infrastructure globally. With best-in-class capabilities for supporting multiple Linde sites in various countries, AT&T is likely to be its primary worldwide network services provider. This means that there will be a single point of contact for the customer with seamless management under a single sourcing policy.

The single network mechanism from AT&T has helped Linde to replace its erstwhile multiple regional and national network vendors. It has also enabled the industrial company to standardize routing and customer premise equipment configurations across the network. With a history of more than 10 years of partnership, the main objective behind the contract extension is to simplify and centralize Linde’s networking infrastructure, thereby supporting the development of integrated offerings and streamlining its operational activities on a daily basis. Financial terms of the deal were not disclosed.

Moving forward, AT&T expects to gain an advantage over rivals through edge computing services that allow businesses to route application-specific traffic to where they need it and where it’s most effective — in the cloud, the network or on their premises. The company is focused on building networks that will enable fiber-based connectivity and LTE to work efficiently side by side with 5G solutions, making the most of business transformation. AT&T’s wireless network covers more than 99% of America-based customers and is reportedly the fastest in the nation. Sustainable subscriber growth, backed by network expansion, remains a key driver.

The company is on track to deploy a standards-based, nationwide mobile 5G network by 2020. Its 5G policy framework hinges on three pillars — mobile 5G, fixed wireless and edge computing. AT&T’s 5G service involves utilization of millimeter wave spectrum for deployment in dense pockets, while in suburban and rural regions, it has planned to deploy 5G on mid- and low-band spectrum holdings.

Despite solid execution of operational strategies, AT&T’s shares have lost 14.3% compared with the industry’s decline of 7.7% in the past three months. With a forward P/E ratio of 9.7, the company topped earnings estimates twice in the trailing four quarters and met the same in the remaining quarters. It has a trailing four-quarter positive earnings surprise of 0.6%, on average.

Zacks Rank & Stocks to Consider

AT&T currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader industry are ADTRAN, Inc. ADTN and InterDigital, Inc. IDCC. While ADTRAN sports a Zacks Rank #1 (Strong Buy), InterDigital carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ADTRAN’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 8.5%, on average.

InterDigital’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 99.5%, on average.

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