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Capital Allocation

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Despite Distractions, AT&T Continues to Gain Momentum During Q2; Shares Attractive

Analyst Note

| Michael Hodel, CFA |

We found a lot to like in AT&T’s second-quarter results. The wireless business continues to gain share, HBO Max again delivered solid customer additions, the consumer broadband business returned to revenue growth, and the television business improved both customer losses and profitability. The firm has also announced additional strategic moves this week that should benefit the business. The wireless partnership with Dish Network promises to add another avenue for growth, and the sale of the Latin American television business further simplifies AT&T’s operations. AT&T remains mired in transition, but we believe the resulting complexity has created an opportunity to invest. We don’t expect to materially change our $36 fair value estimate.

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Company Profile

Business Description

Wireless is AT&T's largest business, contributing about 40% of revenue. The firm is the third- largest U.S. wireless carrier, connecting 64 million postpaid and 17 million prepaid phone customers. WarnerMedia contributes a bit less than 20% of revenue with media assets that include HBO, the Turner cable networks, and the Warner Brothers studios. Fixed-line business communications services, provided to a wide range of entities, provide about 15% of revenue. The consumer broadband segment (about 7% of revenue) primarily provides broadband service to 15 million households. The firm recently sold a stake in its traditional television business, which serves 17 million customers and generates about 17% of sales. This business will be removed from AT&T's financials going forward.

Contact
208 S. Akard Street
Dallas, TX, 75202
T +1 210 821-4105
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 230,000

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