AT&T Remaining On Hold

AT&T Inc. (T) is the largest integrated wireless and wireline telecom company in North America. We positively view the company’s acquisition initiatives (including Dobson and Centennial) as opportunity for expanding its subscriber base and coverage zones, especially as the U.S. subscriber population reaches saturation.

We also believe that AT&T’s focus on convenience to consumers in the form of bundled services (wireless, Internet, video, voice) protects markets more effectively from new entrant, such as cable operators. Significant cost savings and operational efficiencies continue with the merged entities, which are expected to bolster free cash flow and increase dividends moving forward.

Last quarter’s results reflect strong financial performance in wireless highlighted by the largest post-paid subscriber additions in the company’s history and robust activations of iPhone users. Additionally, IP-based U-verse TV continues to perform in-line with expectations.

However, we maintain a cautious view in light of recessionary economic factors which may contribute to weakening demand of wireline services.

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