T - Embedded Expectations Analysis - 2021 08 23
AT&T Inc. (T:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.0x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about long-term value creation, their WarnerMedia exit, and subscriber-driven revenue growth.Specifically, management may have concerns about the alignment between their current business strategy and capital structure with longer-term goals, their wholesale partnership track record, and exit opportunities for WarnerMedia. Additionally, they may lack confidence in their ability to sustain subscriber growth, accelerate their market momentum, and sustain the necessary gains in WarnerMedia, Mobility, and Consumer Wireline to offset declines in their legacy businesses. Moreover, management may be exaggerating the potential spectrum licensing opportunities stemming from their DISH relationship, the benefits of their continued product rationalization, and the pace of broadband revenue growth. In addition, they may have concerns about retail and wholesale traffic, their combined 5G network and
sub-6 spectrum capabilities, and their investments in Mobility, Fiber, and HBO Max.
AT&T is a holding company. Through its subsidiaries, the company is a provider of telecommunications, media and technology services. The company's Communications segment provides wireless and wireline telecom, video and broadband services. The company's WarnerMedia segment includes media and entertainment businesses that principally develop, produce and distribute feature films, television content, and other content globally; and operate digital media properties. The company's Latin America segment provides entertainment services in Latin America and wireless services in Mexico. The company's XANDR segment relies on using data from its customer relationships, to develop digital and video advertising that is relevant to consumers.
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