Source: PaxForex Premium Analytics Portal, Fundamental Insight
AT&T, the telecommunications behemoth, continues to see robust growth in its wireless business, consistently attracting hundreds of thousands of new subscribers every quarter. Simultaneously, its fiber internet division is thriving as the company expands its network infrastructure. Notably, revenue from fiber services on the consumer front is surpassing losses from traditional wireline services.
However, the narrative shifts when it comes to AT&T's business-focused operations. In 2023, business wireline revenue experienced a significant decline of 7.3%, accompanied by a staggering 43.7% drop in operating income within that segment. Despite offering fiber internet services to businesses, alongside consumers, AT&T has been unable to stem the downward trajectory of business wireline revenue.
In response, the company recently unveiled a business iteration of its AT&T Internet Air service, leveraging its 5G wireless network to deliver internet connectivity. While the consumer variant of Internet Air was introduced last year, albeit in limited areas, the business-oriented version aims to address gaps in the company's fiber network.
AT&T is rolling out the business Internet Air service nationwide, positioning it as an attractive option for businesses lacking access to fiber or seeking a reliable backup internet connection. Unlike traditional fiber installations that entail complex setups involving drilling and coordination with building management, Internet Air requires no installation and can be easily set up by users without the need for professional assistance.
The company is adopting an aggressive pricing strategy, undercutting competitors like Verizon with its 5G business internet service. AT&T's Internet Air for Business offers plans starting at $60 per month, with additional savings for businesses bundling it with a wireless plan.
While AT&T's fiber internet service boasts superior speed and stability, the simplicity and hassle-free setup of Internet Air may appeal to businesses deterred by the complexities of fiber installation. This strategic move by AT&T underscores its commitment to catering to the diverse needs of both consumer and business customers in an ever-evolving telecommunications landscape.
While AT&T's fiber internet service represents a significant long-term growth opportunity, its newly introduced Internet Air for Business presents a unique chance to capture business clientele who may have otherwise remained loyal to traditional internet providers or opted for wireless services offered by competitors like Verizon or T-Mobile. This strategic move is expected to help counterbalance revenue declines stemming from businesses discontinuing legacy services.
Although AT&T stock has rebounded from its 52-week low, it remains approximately 40% below its pre-pandemic peak. Over the past few years, the company has undergone a substantial transformation, divesting itself of its ill-fated media acquisitions and refocusing on wireless and fiber initiatives. Despite delivering solid results, investor sentiment has yet to fully recover.
AT&T anticipates generating free cash flow ranging between $17 billion and $18 billion this year, with the stock currently trading at just over 7 times the midpoint of that forecasted range. Should the company demonstrate success in attracting business customers through its new 5G internet offering while sustaining momentum across its other business segments, there is potential for the stock to garner a more favorable valuation from investors.
As long as the price is above 16.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 17.54
- Take Profit 1: 18.00
- Take Profit 2: 19.00
Alternative scenario:
If the level of 16.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 16.00
- Take Profit 1: 15.00
- Take Profit 2: 14.00
