8. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders In Q2 2024: 71
AT&T Inc. (NYSE:T) is one of the three largest telecommunications services providers in America. It is also one of the oldest telecommunications companies in the US and was set up as American Telephone and Telegraph Compay (AT&T) in the late 1800s. This creates a double edged sword for AT&T Inc. (NYSE:T), just like it does for Comcast. For starters, it has allowed the firm to be a stable dividend paying stock. The firm’s sizeable trailing twelve month net income of $12.5 billion allows it to reward investors through dividends. AT&T Inc. (NYSE:T)’s dividend yield is 5.29%, and it was a dividend aristocrat until 2021 after which it had to cut dividends due to spinning off the Time Warner division. Yet, AT&T Inc. (NYSE:T)’s history also means that the firm has had to deal with the ghosts of its past. Its shares tanked by 12% in 2023, for their lowest value since 1993 after a WSJ report revealed that AT&T Inc. (NYSE:T) left toxic lead cables buried underground. While the firm has tried to assuage investor worries, it could see significant headwinds in the future if growing US government pressure forces it to make amends. Additionally, AT&T Inc. (NYSE:T) has to ensure that it leads in fiber deployments and wireless postpaid subscribers, as a shifting internet industry impacts the telecommunications sector.
AT&T Inc. (NYSE:T)’s management commented on these key business areas during the Q2 2024 earnings call:
“The durable trends in 5G and fiber are being driven by more than the solid individual execution within each business. We believe the success of our fiber business is driving growth in mobility and vice-versa as consumers increasingly prefer to purchase mobility and broadband together as a converged service. For example, today, nearly four out of every 10 AT&T Fiber households also choose AT&T as their wireless provider. As a result, our share of postpaid phone subscribers within the AT&T Fiber footprint is about 500 basis points higher than our national average. In our fiber business, we continue to achieve key penetration milestones faster than we anticipated and considerably faster than the fiber providers that do not operate wireless networks based on publicly available data.
A key reason for the strong performance is our ability to sell fiber to our mobile customers. Additionally, we’re able to reach new broadband customers through our substantial mobile distribution channels. The key point here is that our proven ability to drive higher share in both mobility and broadband through converged service penetration is the true benefit of owning and operating both 5G and fiber networks at scale. Over time, we expect this to drive greater returns on invested capital in both our mobility and broadband businesses than either would be expected to achieve as standalone operations. While our convergent strategy began with a focus on our owned fiber footprint, we also see attractive opportunities to expand the availability of AT&T Fiber, and our converged offers outside of it.”
