Leading telecom company, AT&T Inc. (T) is reportedly planning to introduce LTE-based media broadcasting in the US. According to media reports, the company will launch its own Multicast service in 2015, to compete with Verizon Communications Inc. (VZ). Although no official disclosure has been made in this regard, we believe the prospective new service, which remains complementary to the company’s project VIP initiative, will remain accretive to revenues and improve market share.
AT&T remains focused on its project VIP initiative, which targets business expansion. These initiatives target 4G LTE expansion, spectrum and network capabilities enhancement, 8.5 million new U-verse service customers and the addition of 57 million broadband users, covering 75% of the company’s wireline footprint by the end of 2015. In addition, the company is also seeking to expand its fiber network to include 1 million additional customer locations by 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 for revenues and earnings.
Moreover, to support network infrastructure, AT&T acquired 39 lower 700 MHz B Block spectrum licenses from Verizon for $1.9 billion in 2013. In Jan 2014, the company also plans to acquire 49 AWS spectrum licenses from Aloha Partners II, L.P. The licenses cover nearly 50 million people in 14 states. The transaction is expected to be completed by the second half of the year. In Dec 2013, AT&T also completed its lease transaction for 9,000 towers and sale of approximately 600 towers with Crown Castle (CCI) for $4.83 billion.
Better-ranked stocks in this sector include Chunghwa Telecom Co., Ltd. (CHT) with a Zacks Rank #2 (Buy).