Morningstar Rating

Stock Research and Analysis

by Michael Hodel, CFA

Bulls Say

AT&T has direct relationships with millions of residential and business customers. The firm's network upgrade plans should enable it to offer these customers more and better services, driving revenue growth.
AT&T and Verizon Wireless stand head and shoulders above the rest of the U.S. wireless industry. The wireless business should generate strong profits and differentiate the firm from the cable companies.
The DirecTV acquisition will make AT&T a giant in the television industry, providing it with the clout needed to shape the future direction of this business. Read more 

Bears Say

A large portion of revenue and cash flow still comes from fixed-line local and long-distance phone services, but these business remain under attack from competitors and technological substitution.
AT&T's heavy reliance on the iPhone is an issue. About half of its retail customers use the device. Weaning customers off large iPhone subsidies could prove difficult in the current competitive environment.
AT&T's local network upgrade may leave the firm with too little capacity to offer the data speeds customers increasingly demand. The DirecTV deal provides yet another outmoded network. Read more 

Management

We have moved our stewardship rating on AT&T to poor from standard as a result of recent poor capital allocation decisions by management. In particular, we believe the decision to acquire Directv for a premium price will diminish AT&T's competitive   Read more 

Profile

AT&T is the second-largest U.S. wireless carrier, serving 100 million traditional customers and 20 million connected devices such as e-readers. The firm is also the   Read more 

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