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AT&T Inc. (NYSE:T) Bets Big on a Widened Customer Base

AT&T (NYSE:T)
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AT&T Inc. (NYSE:T) looks to be ready to experience growth thanks to sustained efforts on multiple fronts to both bring down expenses as well as raise income. John Stephens – senior executive vice president and Chief Financial Officer of the firm presented at the Deutsche Bank Media, Internet & Telecom Conference that was held last month. Based on his conversation with Matt Niknam, telecom services analyst at Deutsche Bank, it appears that the firm has a lot of cards ready to be played.

AT&T (NYSE:T)

AT&T Inc. Bets Big on a Widened Customer Base

The firm is known to be favoring DirecTV over U-verse. It has already tasted initial success with DirecTV. Based on this, AT&T can boast of more customers, which will keep content providers happy even though the rates may be lower. The firm’s equipment revenue has gone up by 7%.

It is expanding video entertainment services across the mobile, PC and TV. The new DirecTV over-the-top offerings come in three flavors: DTV Now, DTV Mobile, and DTV Preview, which is a ‘skinny’ bundle. They respectively have 5, 2, and 1 allowed devices for streaming. The firm is targeting millennial users for these services. It hopes that they would also take up other products and this will also result in better advertiser appeal because of better targeting capabilities.

In terms of pricing, DirecTV’s rates are about 20% lower than those for U-verse. AT&T (NYSE:T) is betting big on video for year-long growth, hoping that the gains made in DirecTV will more than make up for the losses of U-verse. Through a series of measures such as lower content costs, reducing truck rolls and certain changes to back-office/IT operations, it aims to get DirecTV integration synergies of $2.5 bn by 2018.

Of late, Latin and Central America has been a particular area of focus for AT&T. In Mexico, the firm has 44 mn points of presence. Out of these, more than 650k were added in the fourth quarter alone, even with Mexico City not being fully built out. The firm is also opening up retail stores in Mexico. Nearly one fourth of the subscribers are postpaid. Elsewhere, DirecTV is poised to be a self-sustaining cyclical business. Much of the focus is likely to be on reigning in costs.

Wells Fargo noted that Q12016 results for the telecom industry overall are expected to be better than the previous quarter by a small amount. A part of this is because there haven’t been any really great devices that were launched in this quarter. It may also be that customers are looking forward to the next iPhone. So when the next earnings report is out after about a week from now, we may see a slight dip in equipment revenue.

AT&T has announced its unlimited wireless data plans for customers with both wireless and TV plans. More such promotions and offers can be expected in the second quarter.

Coverage of Olympics by NBC with AT&T

On Thursday, NBC Olympics announced that it will make use of AT&T’s network and some other solutions for the upcoming Olympic games that will be held in Rio de Janeiro. NBC Olympics is a division of the NBC Sports Group. This is not the first time it has gone for AT&T. The upcoming games will run from the 5th to the 21st of August this year. For the same, NBC Olympics will make use of the private line, ethernet and video broadcast services. The purpose is to deliver high-definition coverage of the games.

AT&T has been already giving support to and sponsoring the United States Olympic Committee since 1984. Bob Kiraly, director, Broadcast Telecommunications Operations, NBC Olympics, expressed his happiness over working with AT&T for the 10th time. On the other end, Frank Jules, president, AT&T Global Business said that AT&T (NYSE:T) knows the business very closely and that the firm is committed to letting viewers view the coverage on their screen of choice.

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Hiren Mehta

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