COMPANY DESCRIPTION

AT&T is a holding company. Co. is a provider of telecommunications services. Co. provides its services and products to consumers in the U.S. and services and products to businesses and other providers of telecommunications services worldwide. Co.'s products include: wireless communications, local exchange, data/broadband and Internet services, video services, managed networking, and wholesale services Co.'s wireless segment consists of its subsidiary, AT&T Mobility LLC, which operates as a wireless provider to both business and consumer subscribers. Co.'s wireline subsidiaries provide both retail and wholesale communication services domestically and internationally.

 

ECONOMIC MOAT

We believe that AT&T’s moat comes from it’s size in the wireless industry.  Verizon Wireless and AT&T dominate the wireless industry, with about 60% of the market between their retail and wholesale businesses.  AT&T’s moat is evidenced by the ability to gain market share and invest heavily in its network while generally improving margins and generating solid cash flow. AT&T has a strong brand and high customer loyalty.  The purchase of DirecTV will help widen the moat in years to come.

 

OUTLOOK

AT&T’s 2014 was mixed.  AT&T experienced weaker-than-anticipated profitability across the wireless segment, which is due to competitive pressures from smaller providers like Sprint and T-Mobile. The wireline division, still accounting for about 44% of the top line. The $49 billion DirecTV and $1.9 billion Nextel Mexico acquisitions, are on track to close by mid-2015.  The stock offers a solid dividend.