New growth initiatives
AT&T Digital Life, Mobile Premise Solutions, Mobile Wallet and Connected Car are some of the initiatives that have huge growth potential.
AT&T Digital Life is an IP-based home security and automation service to be launched inyear 2013. It gives consumers control to secure and manage their homes from virtually any device – smartphone, tablet or PC.
Mobile Premise Solutions – This new service is an alternative for wireline voice service and in the future will include high-speed IP Internet data services.
Mobile Wallet – AT&T Inc. (NYSE:T) is participating in the ISIS mobile payment service joint venturealong with T-Mobile and Verizon Communications Inc. (NYSE:VZ). Market trials started with its launch in Austin and Salt Lake City. The two major advantages for this project are – it is being promoted by 3 of the largest carriers in the U.S., and has been embraced by multiple payment processors.
Connected Car. More than half of new vehicles are expected to be wirelessly connected by 2016. AT&T already has deals with leading manufacturers such as Ford, Nissan and BMW. In late February, AT&T and General Motor’s OnStar service unit struck a deal to bring connected cars to the market starting with the 2015 fleet. The company has beenvery aggressive in connected car business, as there is a huge opportunity to expand.
Analyzing the revenue of AT&T
With numerous initiatives and future plans, what is important going forward is whether these investments have positive impact on revenue? The revenue for last two years are, 2011 – $126.72 billion, 2012 – $127.43 billion. There has been a gradual increase in the revenue. Below is a break-down of revenue for 2011 and 2012. There is significant decrease in revenue for Directory and Voice, and increase in revenue under Wireless services, Data and Others.
| Particulars | Twelve Months Ended ($ in millions) | ||||
| 31/12/2012 | 31/12/2011 | % Chg | |||
| Operating Revenues | |||||
| Wireless service | $ | 59,186 | $ | 56,726 | 4.3% |
| Data | 31,798 | 29,560 | 7.6% | ||
| Voice | 22,619 | 25,126 | -10.0% | ||
| Directory | 1,049 | 3,293 | -68.1% | ||
| Other | 12,782 | 12,018 | 6.4% | ||
| Total Operating Revenues | 127,434 | 126,723 | 0.6% | ||
The company has already initiated investment in the Project VIP and returns of this investment will lead to a further increase in revenue under Wireless, Data and Other.
If the economy remains stable, Project VIP will drive EPS to grow in the mid-single-digit or above range, consolidated revenues to grow to GDP plus 100 basis points and increase in consolidated margins. Project VIP includes numerous projects from investment in for high speed internet access to new initiative like connected cars. Thus there is huge potential for the company to increase its revenue in the coming 3-5 years. A long term investor who wants exposure in the telecom industry should consider AT&T Inc. (NYSE:T).
The article 4G and New Initiatives Roadmap for Telecom Stocks originally appeared on Fool.com and is written by Sujata Dutta.
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