AT&T Inc. (T): Fighting Hard, But Stuck In The Middle

Never Say Never

AT&T, however, isn’t sitting back doing nothing. In fact, the telecom giant recently announced that it will add more new customers than expected in the second quarter. According to The Wall Street Journal, the half million total is more than 150,000 more than added in the same period a year ago. Pushing the impressive customer gains were trade in offers and discounted tablets.

This is inspiring news for the giant. However, it comes at the cost of pressuring margins. Still, it allows the company to lock customers into multi-year AT&T Inc. (NYSE:T) contracts that the company hopes will allow it to earn a good return over time.

This is the way companies fight market share wars. Sometimes you need to take some near-term hits to open up long-term opportunities. Of course too many hits can lead to losing the war. So, it will be important to keep an eye on AT&T’s promotional activity to ensure that its pricing decisions remain disciplined and rational.

Underdog?

AT&T Inc. (NYSE:T) shares yield around 5.1%, a full percentage point higher than Verizon shares. Although Verizon Communications Inc. (NYSE:VZ) has been doing better of late, AT&T’s second quarter looks likely to impress. At the very least, it will show that AT&T is still in the game.

Add to the mix that Verizon Wireless is a joint venture between Verizon and Vodofone. It is likely to cost Verizon over $100 billion dollars to gain full control of its wireless arm. That makes Verizon Communications Inc. (NYSE:VZ) a far more complex growth story than many realize.

The top lines at both companies have been growing fairly steadily, so neither is a particularly bad company. However, with a full percentage point yield advantage, AT&T Inc. (NYSE:T), the “underdog,” is probably a better option right now for income investors.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Fighting Hard, But Stuck In The Middle originally appeared on Fool.com.

Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.