AT&T (T) Bull Bear Case
Bear Case Bull Case EPS EPS $2.69 $2.69 P/E (based on Telecom Industrials P/E fwd. multiple) 18.74x (based on historic 5 yr. dis- count to S&P 500) 13.45x Target Price Target Price $50.41 $36.2 A 2% YoY increase in The Bear case Assumes a growth rate of 1.4% based on the company's five-year average revenue growth. revenues based on: A rise in postpaid data ARPU as smartphone penetration increases. Postpaid data ARPU has been increasing at an average of 18% over the last five quarters and should increase to $23.08 by the end of FY2013. This should Decreasing margins as competitors fight over a small remaining subscriber base. result in wireless data revenues of $22 billion, up 20% YOY. Data ARPU margins decrease with an increase in tablet subscribers relative to Growth in net smartphone users. subscriber additions as the company enhances its networks Subsidy costs for and increases Coverage and services in the US. smartphones cause margins to shrink. Margins increase as 4G A denial by the SEC to acquire Leap Wireless will limit AT&T's ability to penetrate the prepaid market through an established subscriber base and LTE gets fully deployed. Increase in interconnected devices that will result in higher data solutions hurt potential future growth. A negative ruling by the FCC or a court in the petition against U-verse would result services revenue. With the expansion of Aio Wireless in a loss of revenues if the company has to nationwide, the company plans to penetrate the lower income prepaid market and compete more effectively. cancel service to comply with regulations. Delays in 4G LTE implementation can hurt margins in the short term and the Sale of the company's towers. company will likely lose market share to competitors with a superior network. Potential acquisitions in Europe and strategic partnerships in Latin America. BIDNESS SOURCES: Company Data, SEC filings, Bloomberg Professional Services Etc. DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein orto suggest approval for or affiliation with Bidness Etc.
AT&T (T) Bull Bear Case
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