Yahoo Finance AT&T's (T) CEO Provides Business Update to Shareholders
AT&T Inc.’s T chief executive officer, John Stankey, recently provided an important business update to shareholders.
While the demand in the wireless industry remains healthy, AT&T is ready for any seasonal rise in competition and is confident of sustaining its wireless momentum.
The company is witnessing an increasing share in underpenetrated market segments, driven by its improved network performance and go-to-market strategy.
AT&T’s shares have lost 24.4% in the past year compared with the industry’s decline of 18.2%.
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Stankey said that AT&T’s outlook for 2022 and beyond does not assume a continuation of significant customer growth experienced in 2021. If the recent trends continue, the company should be better positioned to capitalize on the demand.
AT&T’s postpaid phone average revenue per user (ARPU) in 2022 is expected to remain stable year over year. Efforts to upgrade customers to higher-ARPU unlimited plans and improved international roaming are also expected to offset the impact of amortization for device promotions.
Less than a quarter of gross additions in third-quarter 2021 traded in new devices for premium promotional offers. Around 20% of AT&T’s postpaid smartphones are on Unlimited Elite, the company’s highest-ARPU and fastest-growing rate plan.
Furthermore, AT&T’s 5G deployment plans are on track. The company remains comfortable with its fiber build plan. In the coming years, AT&T is likely to have multiple opportunities from the country’s largest fiber network. Stankey expects AT&T to continue improving its broadband position by expanding its fiber footprint.
Regarding the pending WarnerMedia-Discovery deal, the regulatory review process is in progress. Stankey reiterated expectations of leverage levels of 2.6 times at the close of the deal and 2.5 times by the end of 2023.
After the close, the company expects an annual dividend between $8 billion and $9 billion. That’s more than a 40% payout ratio assuming $20 billion in free cash flow. The transaction is expected to be closed by the middle of 2022.
The company is well-poised to benefit from investments to deliver 5G capabilities for new use cases to its expanding customer base.
T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Clearfield, Inc. CLFD is a better-ranked stock in the telecom sector, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised 8.8% upward over the past 30 days.
Clearfield delivered a trailing four-quarter earnings surprise of 50.8%, on average. It has rallied 139.2% in the past year.
Qualcomm, Inc. QCOM, carrying a Zacks Rank #2 (Buy), is another solid pick for investors. The consensus estimate for current-year earnings has been revised upward by 8.6% over the past 30 days.
Qualcomm delivered a trailing four-quarter earnings surprise of 11.2%, on average. It has appreciated 10.5% in the past year.
Sierra Wireless, Inc. SWIR also carries a Zacks Rank #2. The consensus mark for current-year earnings has been revised upward by 20.5% over the past 30 days.
Sierra pulled off a trailing four-quarter earnings surprise of 34.2%, on average. The stock has returned 10.2% in the past year.
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