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AT&T (T) Partners General Motors for Vehicular 5G Connectivity

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AT&T Inc. (T - Free Report) and General Motors Company (GM - Free Report) have taken automotive connectivity to the next level by aiming to bring 5G network in the latter’s vehicles that will be manufactured over the next decade in the United States. The partnership aims to sow the seeds of a fifth generation cellular network architecture in the upcoming models of General Motors, while facilitating existing 4G LTE (Long Term Evolution)-capable models to seamlessly migrate to the upgraded technology.

The 5G standards are likely to set a new benchmark for automotive connectivity and will power a fleet of connected vehicles. The 5G core network in vehicles will help to improve roadway-centric coverage with faster music and video downloads, secure over-the-air software updates and faster navigation, mapping and voice services. With 5G network connectivity, more data is likely to be available to users on the go, which in turn will provide a strong foundation for General Motors’ pivotal growth strategy that hinges on advanced technology such as Super Cruise (that provide the ease and convenience of hands-free driving) and Vehicle Intelligence Platform (a connected electric vehicle architecture that enables over-the-air-updates).

The two companies have been working in tandem since the launch of in-vehicle Wi-Fi hotspots in 2014. AT&T also offered premium content of WarnerMedia to stream across connected General Motors vehicle in 2020. The companies even worked in close association to test drive connected vehicles for 5G technology and the current rollout appears to be the culmination of this collaborative effort. General Motors further intends to provide 5G network access to its strategic partners for interoperability and mobility services such as e-commerce, smart city and vehicle-to-electric grid, once the technology is fully available.  

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 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.

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 boost end-user experience. AT&T plans to deploy 5G+ service in stadiums, arenas and practice facilities across the country by the end of 2021, along with various company-owned retail stores, to revolutionize the shopping experience. In addition, the company aims to launch 5G+ in seven airports while offering secure 5G facilities to the FirstNet network. In order to expand coverage and improve connectivity, AT&T acquired 80MHz of mid-band spectrum in the C-Band auction during the quarter for a total consideration of $27.4 billion. These airwaves offer significant bandwidth with better propagation characteristics for optimum coverage in both rural and urban areas. 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.

The stock has lost 7.2% over the past year compared with the industry’s fall of 1.4%.

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AT&T currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the broader industry are Juniper Networks, Inc. (JNPR - Free Report) and Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Juniper has a long-term earnings growth expectation of 11.8%. It delivered an earnings surprise of 7.5%, on average, in the trailing four quarters.

Qualcomm has a long-term earnings growth expectation of 21%. It delivered an earnings surprise of 13.5%, on average, in the trailing four quarters.

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