Back to top

Analyst Blog

The second-largest U.S. mobile service provider AT&T Inc. (T - Analyst Report) is planning to acquire Montreal-based Superclick Networks for $15 million.

Superclick is an Internet provider for the hospitality industry. It designs, manages and deploys Internet services to top hotels and health care facilities such as Intercontinental Hotels Group plc (IHG - Snapshot Report), Marriott International, Inc. (MAR - Analyst Report), Four Seasons, Jumeirah, Kimpton Hotels, Mandarin Oriental Hotels throughout North America, Canada, the Middle East and parts of Asia.

The deal received approval from the board of directors of Superclick and is awaiting shareholder approval. It is expected to be completed in the fourth quarter.

The acquisition will provide AT&T an opportunity to enter into the hotel WiFi (wireless broadband) business. The demand for hotel WiFi has been growing at a faster pace. Now a days, every hotel needs the Internet to attain the five-star status. AT&T is the leader in WiFi connectivity with over 24,000 WiFi hotspots in the U.S., and 135,000 globally.

Superclick has a high margin business, and generated 66.3% in the last quarter. Coupled with high margin, consistent growth and global presence, the deal sounds to be healthy for AT&T.

Although Superclick does not have a stellar revenue track record, it seems to be growing rapidly. In the last quarter, revenue improved 54% year over year to $1.7 million. Year-to-date, revenue improved 58% to $4.4 million from the year-ago level of $2.8 million.

Hence, if the deal gets approved, it would provide a massive boost to AT&T’s revenue and its future growth. Talks between AT&T and Superclick were on since last year, when the former initially extended a proposal and was rejected by the latter due to the low bid price.

In addition, the proposed acquisition is very small compared to AT&T’s ambitious $39 billion purchase of T-Mobile, a Deutsche Telekom’s unit. The takeover of T-Mobile is facing a major roadblock with the Department of Justice filing an antitrust lawsuit to block the deal a month ago.

While waiting for AT&T to enter into the WiFibusiness, we are maintaining our long-term Neutral recommendation on the stock with the Zacks #3 Rank (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
FELCOR LODG… FCH 10.50 +3.75%
OLD DOMINIO… ODFL 63.63 +1.42%
VASCO DATA… VDSI 13.64 +1.19%
LENOVO GROU… LNVGY 27.17 +0.41%
CITI TRENDS… CTRN 20.25 +0.35%