AT&T Inc Could Meet Demand with Its Robust Spectrum Portfolio: Jefferies

AT&T Inc Could Meet Demand with Its Robust Spectrum Portfolio: Jefferies

Jefferies believes that AT&T has ample room to increase its market share through current Data Free TV, unlimited data plans, and upcoming DirecTV Now

By Staff Writer on Sep 15, 2016 at 1:54 pm EST

Today, Jefferies conducted an in-depth review of telecommunication company, AT&T Inc. (NYSE:T). The firm noted that AT&T investors are concerned over the company’s latest strategy amid unlimited data plans by competitors as well as delayed DirecTV launch. They are anxious to know whether the telecom behemoth will continue to provide robust service under such circumstances.

Nevertheless, Jefferies research analysts continued their trust towards the company and its capability to meet future demand. The mobile carrier not only has a robust spectrum portfolio and well-paced small cell deployments, but also is strong in terms of technology developments that will further reduce network strain.

In this regard, the analysts anticipated three catalysts that are likely to drive customer traffic in the near future. These include over-the-top content (OTT) expansion through upgraded version of “DirecTV Now,” introduction of “Data Free TV” that permits current DirecTV and U-Verse subscribers to stream unlimited live or recorded content, and lastly the rising penetration of limitless data plans. Given these factors, the firm reiterated a Buy stance for the company’s stock with a $48 target price.

Available Spectrum

At present, AT&T has more than 40MHz spectrum, through which it could easily cater on-going traffic requirements. This spectrum is anticipated to add more than 50% capacity to the LTE network in coming years. The refarming of 2G and 3G radio spectrum for 4G services is also an additional source. Besides, the company could also arrange small-cell deployments to increase its capacity, while multiple-input and multiple-output (MIMO) and carrier aggregation are likely to provide additional tools that are yet to be fully deployed.

5G Race yet to Start

AT&T, like some of its peers is actively testing the technology using pre-standard equipment to gain a better understanding of the opportunity and challenges. Given the likely emphasis on small cells for 5G, research analysts trust that AT&T's fiber footprint has positioned the company well for transition.

Carriage Agreement with Discovery Channel

On September 8, 2016 AT&T and Discovery Communications Inc. (NASDAQ:DISCA) signed a long-term carriage agreement. In line with the terms, AT&T will air Discovery’s portfolio on its U-Verse and DirecTV platforms. This contract is also likely to bring traffic for Discovery Channel’s enthusiasts. Both the companies also agreed to continue airing the portfolio on AT&T’s DIRECTV Now, which is planned to launch in fourth-quarter fiscal 2016 (4QFY16).

AT&T Stock Movement

Following Jefferies report, investors’ confidence regained towards the company. During intraday trading, its stock surged from $39.62 to $40.40. Currently, it is trading at $40.28, up 0.99 % as of 12:25 PM EDT.

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