AT&T COO Soothes Investor Nerves With Focus On Mobility

Speaking at the Morgan Stanley (NYSE:MS) Technology, Media and Telecom Conference, AT&T Inc.’s (NYSE:T) president and COO, and CEO of Warner Media, LLC, John Stankey, provided business update to shareholders. The telecom and media giant’s share price rose 5.2% in yesterday’s trading session to close at $38.18.

Stankey stated that AT&T’s 5G network covered more than 80 million people as of February-end. The company plans to offer 5G coverage across the nation by the end of second-quarter 2020. He added that the company projects wireless service revenues to grow by more than 2% in 2020. Based on anticipated 5G growth and HBO Max opportunities, mobility will continue to be the biggest driver of revenue growth and profitability.

On Mar 3, AT&T Communications announced that its 5G network is currently live for consumers and businesses in 22 more markets. Resultant, the company is offering access to 5G on its unlimited wireless plans for consumers and businesses in a total of 80 markets across the United States. Also, its 5G+ network, enabling super-fast speeds and responsive connections, is available in parts of 35 cities.

Stankey said that the company remains confident in achieving its 2020 and long-term guidance. AT&T expects FirstNet to contribute to wireless revenue growth, with subscriber additions ramping on push-to-talk capabilities and new devices. Furthermore, it is on track for a May launch of HBO Max. He continued that AT&T has identified 10 categories of cost initiatives over the short-, mid- and long-term targeting double-digit billions of dollars in gross savings over the next three years.

The Dallas, TX-based company announced that it has inked an agreement with Morgan Stanley to retire shares worth $4 billion, beginning in the second quarter, through an accelerated share repurchase agreement. AT&T said that it intends to use 50-70% of free cash flow (after dividends) to retire nearly 70% of shares it had issued to fund the acquisition of Time Warner (presently WarnerMedia) by the end of 2022.

The company ended 2019 with a net debt-to-adjusted EBITDA ratio of about 2.5. As of Dec 31, 2019, it had $151,709 million of long-term debt. AT&T’s guidance for net debt-to-adjusted EBITDA in the 2-2.25x range by the end of 2022 has remained unchanged.

AT&T’s shares have surged 28.1% compared with 12.8% growth recorded by the industry in the past year, supported by strong execution of operational strategies.




The company topped earnings estimates thrice in the trailing four quarters and matched the same in remaining one quarter, delivering a positive surprise of 0.9%, on average. The stock is currently trading with a forward P/E of 10.08X.

AT&T currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader industry are PCTEL, Inc. (NYSE:T) , Motorola Solutions, Inc. (NYSE:MSI) and Qualcomm Incorporated (NASDAQ:QCOM) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PCTEL surpassed earnings estimates in the trailing four quarters, the beat being 150.6%, on average.

Motorola topped earnings estimates in the trailing four quarters, the surprise being 6.6%, on average.

Qualcomm surpassed earnings estimates in the trailing four quarters, the beat being 10%, on average.

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