AT&T Inc.’s T subsidiary, AT&T Communications, recently announced that it has reached an agreement to provide 5G services to the Nellis Air Force Base in southern Nevada. The telecom behemoth will also deliver FirstNet, a nationwide public safety communications platform built by AT&T with funding from the federal government, to eligible personnel across Nellis. Financial terms of the deal remained undisclosed.
Reportedly, the base covers more than 14,000 acres and is one of the biggest employers in the region. The network operator plans to equip Nellis with 5G infrastructure to facilitate voice and data services for more than 40,000 Air Force personnel, family members and retirees. It will further provide wireless high-speed external and in-building connectivity across the base’s flight line, facilities and on-site medical center.
The communications platform is expected to support an array of technology tools and innovation that can help the base modernize its mission approach. AT&T did not provide specific ideas, but communicated some use cases that its 5G network is likely to enable. This includes assistance for flight line operations where mission data is transferred at high speeds with lower latency; constant video surveillance and analytics for enhanced base security; and virtual real-time management of inventory, aircraft schematics and diagnostic analysis.
AT&T has been aggressively building FirstNet for first responders and creating next-generation mobile 5G. Over the past five years or so, the company has invested more than $145 billion in wireless and wireline networks, including capital investments, and acquisitions of wireless spectrum and operations. Its fiber network is one of the nation’s largest and connects more IoT devices compared with any other provider in North America.
The company is focused on surpassing the annual 6-8% reduction in network operational costs it has achieved in recent years. To this end, AT&T has begun several cost reduction initiatives as it targets an additional 4% reduction on lower labor-related costs and corporate overhead. It has already virtualized 71% of its network functions and expects to meet its target of 75% by the end of 2020.
The company is on track to deploy a standards-based, nationwide mobile 5G network by 2020. Its 5G policy framework hinges on three pillars — mobile 5G, fixed wireless and edge computing. Its 5G service involves utilization of millimeter wave spectrum for deployment in dense pockets, while in suburban and rural regions, it has planned to deploy 5G on mid- and low-band spectrum holdings.
The company is scheduled to report fourth-quarter 2019 results on Jan 29, before the opening bell. For 2020, AT&T projects revenues to grow between 1% and 2%, including wireless equipment revenue gains from 5G device adoption. It expects adjusted earnings per share of $3.60-$3.70. This includes HBO Max investment of $1.5-$2 billion and share retirements. While adjusted EBITDA margin is anticipated to be stable with 2019 levels, free cash flow is likely to be $28 billion.
This Zacks Rank #3 (Hold) stock, with a market cap of $278.3 billion, has impressed investors with its recent earnings streak. It topped estimates thrice in the trailing four quarters, the beat being 0.9%, on average. It is currently trading with a forward P/E of 10.56X.
Backed by strong execution of operational strategies, the stock has added 13.5% compared with 5.2% growth recorded by the industry in the past six months.
Investors who are looking for solid profits in 2020 may consider some better-ranked stocks in the broader industry. These include Sogou Inc. SOGO, the Rubicon Project, Inc. and Chegg, Inc. CHGG. While Sogou sports a Zacks Rank #1 (Strong Buy), Rubicon and Chegg carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sogou has a long-term earnings growth expectation of 20.2%.
Rubicon surpassed earnings estimates in the trailing four quarters, the surprise being 86.7%, on average.
Chegg has a VGM Score of B. It topped earnings estimates in the trailing four quarters, the surprise being 49.4%, on average.
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