Tablet PCs Could Yield 11% Upside for AT&T Stock

By
A A A

As tablet PC usage rises, U.S. telecom giant AT&T ( T ) could see a sharp rise in its revenues from wireless data customers. AT&T competes mainly with Verizon ( VZ ) and Sprint Nextel ( S ) in the U.S. wireless market.

We see a potential upside of nearly 11 % to our $37.91 stock price estimate for AT&T if the company's average revenue per user (ARPU) of mobile data reaches $40 a month by the end of our forecast period, rather than the $28 a month that we currently forecast. Our analysis follows below.

Tablets everywhere


In a recent interview with Bloomberg News, AT&T Mobility CEO Ralph de la Vega noted that  AT&T is looking to capitalize on the tablet revolution that began with the launch of Apple's iPad earlier this year. ""There's going to be a huge number of tablets, different sizes, different functions," de la Vega said.

Cisco ( CSCO ) plans to unveil a tablet for enterprise customers in early 2011. Dell ( DELL ) has already released its Streak tablet. Hewlett-Packard ( HPQ ), LG, Motorola ( MOT ), Samsung and others have tablets in the works as well. It seems plausible that these devices will drive a surge in wireless data usage as networks get faster and devices  grow more powerful.

Impact on AT&T

We currently estimate that AT&T's ARPU from data will grow from an estimated $14.50 per user per month in 2009 to just over  $28 by the end of our forecast period.

However, the advent of tablet PCs running on speedy 4G networks should encourage users to consume more data on cellular networks like that of AT&T. In this scenario, we think AT&T's data ARPU could reach $40 by the end of our forecast period, yielding an 11% upside to our stock price estimate.

You can see the complete $37.91 Trefis price estimate for AT&T's stock here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: CSCO , DELL , HPQ , MOT , S , T , VZ

Trefis

Trefis

More from Trefis:

Related Videos

FordLoop8.Mov
FordLoop8.Mov                       

Stocks

Referenced

83%
75%
76%
66%
72%

Most Active by Volume

138,795,140
  • $16.04 ▼ 2.73%
87,130,091
  • $130.415 ▲ 1.26%
38,111,270
  • $17.20 ▼ 4.34%
36,873,585
  • $2.08 ▼ 4.15%
35,125,676
  • $25.89 ▼ 0.08%
31,856,876
  • $34.01 ▼ 1.90%
31,179,243
  • $7.34 ▼ 4.80%
30,524,398
  • $80.41 ▲ 1.07%
As of 2/26/2015, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com