Leading telecom company
) will unveil the Digital Life package, its home security and
automation service, on May 3, in 15 cities including Los Angeles,
Chicago, San Francisco and Miami. The new product includes
security cameras, thermostats and locks that can be controlled
from phones and tablets.
The company targets to penetrate 50 markets with its digital
life products by this year-end. We believe that product
diversification will enable AT&T to grow beyond its legacy
market and generate incremental revenues in the coming years.
The company stated in its press release that the market for
home security services remains significantly unaddressed as only
1% of the U.S. households have automated security system. As a
result, the company sees a potential financial opportunity to tap
an $18 billion market of automated home security systems.
AT&T has so far seen more success in this market compared
to its peers thanks to its own technology in home security
digital products and adequate measures to market and promote
AT&T has priced the equipment and installation of a home
security package for $250 with monthly charges of $40 per month.
In addition, the company also offers a camera package for $10 per
month along with equipment and installation, climate control for
$5 per month, and a remote water main shutoff control for $10 per
month. However, a basic package with only security would cost
around $150 initially and $30 per month.
The company already enjoys strong momentum in both wireline
and wireless businesses. While continued strength in smartphones
is fueling growth in wireless business, wireline is benefiting
from growth in its U-verse and strategic services.
AT&T is the leader in WiFi (wireless broadband)
connectivity with over 30,000 domestic and 190,000 international
hotspots. We believe the addition of Disney content will fuel
growth in U-verse services, resulting in higher data revenues in
the wireline segment.
Other positive attributes for the company include a strategic
realignment initiative and a healthy financial profile. However,
persistent access line losses, competitive pressure from the
) and regulatory issues will likely weigh on the stock in the
AT&T, which competes with other industry players like
Sprint Nextel Corp.
MetroPCS Communications, Inc.
) retains a Zacks Rank #3 (Hold).
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