Ace wireless provider
) has inked a multi-year agreement with
The Walt Disney Company
) for the distribution of Disney's content services to AT&T's
U-verse Television customers. U-Verse subscribers will now be
able to watch Disney sports, entertainment and news through their
TV sets, smartphones, computers and tablets. With this, AT&T
aims to promote its bundled services and attract customers by
providing value added services on a single platform.
AT&T enjoys strong momentum in both wireline and wireless
businesses. While continued strength in smartphones is fueling
growth in wireless, 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.
Further, these services are backed by AT&T's network which
enjoys the best Internet speeds across the industry as it is the
only U.S. carrier that provides 4G networks through both Long
Term Evolution (LTE) and High-Speed Packet Access Plus (HSPA+)
AT&T initially rolled out LTE networks late last summer
that went on to become the benchmark of mobile technology and the
life-blood for operators across the world. The company's 4G LTE
service is currently available in 103 markets with more than 150
million users in the U.S. It aims to reach about 250 million
people by 2013-end and 300 million by year-end 2014.
We remain optimistic about AT&T's growth prospects given
its subscriber accretion, higher smartphones adoption, LTE mobile
broadband network, iPhone sales and U-verse expansion. These
would in turn lead to improved revenue growth.
The company's foray into cloud computing and hotel WiFi
businesses is expected to result in better profitability. Other
positive attributes for the company include a strategic
realignment initiative and healthy financial profile. However,
persistent access line losses, competitive pressures from peers
) and regulatory issues will likely weigh on the stock in the
AT&T retains a Zacks Rank #3 (Hold). For the long term, we
have a Neutral recommendation on the stock.
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