Week 4: Competition

AT&T contends with multiple competitors in the wireless business and the competition is increasing.  Per Federal Communication Commission regulation, we share our service areas with PCS licenses, other wireless licenses and enhanced mobile radio licenses which promote the presence of multiple competitors.  AT&T direct competitors are Verizon Wireless, T-Mobile, and Sprint.  These competitors have a similar, if not exact, business models. This characteristic is why they are AT&T direct competitors. The below chart illustrates other attributes of the companies. 

	AT&T	SPRINT	Verizon
Market Cap:	179.25B	23.56B	132.21B
Employees:	245,350	39,000	180,900
Qtrly Rev Growth (yoy):	0.02	0.00	0.04
Revenue (ttm):	127.47B	35.44B	118.26B
Gross Margin (ttm):	0.56	0.42	0.61
EBITDA (ttm):	28.19B	5.30B	32.45B
Operating Margin (ttm):	0.10	0.02	0.13
Net Income (ttm):	7.30B	-4.33B	1.56B
EPS (ttm):	1.31	-1.44	0.55
P/E (ttm):	25.84	N/A	84.62
PEG (5 yr expected):	2.08	N/A	1.78
P/S (ttm):	1.38	0.68	1.11

While AT&T has a few direct competitors it also has a lot of indirect competitors.  In the wireless division, our indirect competition is any company that offers phone apps, wireless advertising and WiFi/Internet capabilities.  Our indirect competitors do not offer the same exact service but have the ability to gain market share because of a somewhat similar product or service.  For example, Google is a good example of an indirect competitor.  They have their own phones (Android) and are expanding their presence around wireless.  It will only be a matter of time before Google buys a secondary wireless company to become a direct competitor.

 

Not so long ago AT&T was concentrated on wireless and wire line consumer markets.  Our customers were distinctly identified by devices, service features and plan pricing.  Our competitors each have unique offerings that differ slightly while still offering similar service.  However, the entire base market is converging.  We are still focused on bringing it all together for our customers with innovative smart phones and next generation TV services but we also have a distinct focus on IP growth.  As the world moves increasingly faster towards IP based solutions we have additional priorities. We will lead the next wave of growth to meet the demand for higher speed broadband access.  Our IP will enable full access everywhere, all the time and in every device to meet customer needs.  We see a dramatic increase in video and live streaming that will test network capacities.  We believe this is where all markets will converge into single devices that must be able to do it all.  In the future, the current smartphones won't be so smart.  The new market will demand intelligent devices connected to a cloud based solution and IP will be king.  AT&T has the most powerful IP backbone in the industry to support the future demand.  AT&T is not just going to be a segment leader but rather the corporation that leads the world into the communication future.