Leading wireless carrier, AT&T inc. (T) announced that it will provide communication services to the Formula One racing team, Infiniti Red Bull Racing. AT&T will connect the workforce of Infiniti Red Bull Racing across key locations like Milton Keynes, U.K., Infiniti Red Bull’s headquarter, engine manufacturer Renault in Viry, France and the team’s wind tunnel, Bedford, U.K.
AT&T will also connect the team’s trackside for any 20-race circuits around the world. We believe the new deal will be accretive to AT&T’s growing wireless business revenues and at the same time expand its reach globally.
Strategic business deals have played major roles in shaping AT&T’s growth story. We are encouraged by the company’s global alliance with GE that allows machines of the latter to connect with AT&T network and cloud, creating the first highly secure wireless communication services for GE's Industrial Internet eco system. We also foresee revenue sources from AT&T’s collaboration with Delta Air Lines (DAL) for providing Wi-Fi connectivity on 4G networks. Further, AT&T struck a global networking services deal with New Zealand-based Opus International Consultants.
Further, the company proposed to take over the largest prepaid wireless operator in the U.S. –Leap Wireless International (LEAP) – for $1.2 billion. This acquisition will also give AT&T control over Leap’s spectrum in the PCS and AWS bands covering 137 million people, thereby enhancing the spectrum base of the former. Further, the deal will endow AT&T with a stronger pre-paid business line, competitive advantage, more customer care service facilities, low-cost data plans and robust financial resources. The deal is currently awaiting regulatory approval and is expected to be over by early 2014.
In Sep 2013, AT&T Inc. closed the acquisition of Alltel’s wireless operations from Atlantic Tele-Networks Inc. for $780 million. The acquisition gave the telecom behemoth spectrum licenses, retail stores and network assets of Alltel. Additionally, AT&T gained Alltel’s 585,000 subscribers in six states, particularly in the South and Midwest U.S. Furthermore, the company is reportedly contemplating a buyout of the world’s second largest telecom company, Vodafone Group plc (VOD) next year.
We believe that all these acquisitions and strategic partnerships support the company’s growth goals in wireless services, in particular data services, which represent $22 billion in annualized revenues growing at a rate of approximately 18% per annum.
AT&T retains a Zacks Rank #3 (Hold).