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AT&T (T) Remains Focused on Customer-Centric Business Model

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The top management from AT&T Inc. (T - Free Report) recently debriefed investors about its progress on various operational metrics to allay the fears, as a fresh wave of coronavirus outbreak appeared to cast a gloom. John Stephens, the senior executive vice president and chief financial officer of the company, also shed some light on its continued business transformation initiatives to stay relevant to customers amid the challenging macroeconomic environment.

With a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. The company continues to focus on seamless broadband connectivity for unhindered access to streaming content from HBO Max with healthy investments in 5G and fiber-optic infrastructure. In addition, the availability of HBO Max on Amazon Fire TV — the standalone streaming device from Amazon.com, Inc. (AMZN - Free Report) — has further enhanced its customer appeal. AT&T also added to the festive quotient by announcing its upcoming Wonder Woman 1984 movie release simultaneously across HBO Max and movie theatres on Christmas.

Solid cash flow with prudent capital management strategies is likely to offer the company the requisite financial strength and flexibility to maintain this growth momentum through continued infrastructure investments. Stephens revealed that AT&T has refinanced $60 billion worth of debt at historically low rates and currently has about $30 billion of debt due through 2025. The company expects to generate cash flow in excess of $26 billion in 2020 with a dividend payout rate of more than 50% as it aims to reward shareholders with attractive risk-adjusted returns.    

An integrated fiber expansion strategy is expected to improve the broadband connectivity for both enterprise and consumer markets, while steady 5G deployments are likely to lend support for improved end-user experience. AT&T remains focused on business transformation efforts to augment operational efficiency and facilitate optimum utilization of resources to enhance value. The company expects this holistic growth policy to add significant customer value and generate healthy ROI across the business.

Moving forward, AT&T is poised to benefit from the impending 5G boom. As the first carrier in the industry, the company has unveiled its 5G policy framework that will hinge on three pillars — mobile 5G, fixed wireless and edge computing. In order to have a seamless transition among Wi-Fi, LTE and 5G services, AT&T intends to deploy a standards-based nationwide mobile 5G network. Its 5G service entails the utilization of millimeter-wave spectrum for deployment in dense pockets while in suburban and rural areas, it intends to deploy 5G on mid- and low-band spectrum holdings. It believes that as the 5G ecosystem evolves, customers can experience significant enhancements in coverage, speeds and devices.

The stock has lost 23.2% in the past year against the industry’s growth of 1.4%.



We remain impressed with the focused attempts of this Zacks Rank #3 (Hold) stock to boost shareholder wealth. Some better-ranked stocks in the industry are Gogo Inc. (GOGO - Free Report) and Cambium Networks Corporation (CMBM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gogo delivered a positive earnings surprise of 23.9%, on average, in the trailing four quarters.

Cambium has a long-term earnings growth expectation of 20%. It delivered a positive earnings surprise of 137.8%, on average, in the trailing four quarters.

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