Amid bad press related to alleged misuse of location services data, AT&T Inc. (NYSE:T) has decided to altogether cease data sharing activities with third-party vendors from March this year. The company expects the strategic move to prevent customers from being adversely affected in the future.
Owing to security concerns, AT&T had stopped sharing most of the location services data last year, barring a select few that reportedly benefited customers such as roadside assistance and fraud prevention. However, when a report cited that data from various carriers, including AT&T, T-Mobile US, Inc. (NYSE:S) , Sprint Corporation (NYSE:S) and Verizon Communications Inc. (NYSE:VZ) were maliciously used by bounty hunters, it decided to shun these activities.
On the surface, it appears that telecom carriers share some cell phone location-based data to third-party vendors, without being aware of how the data is consumed by the end user. Detailed investigation has revealed that this data is accessed by a wide array of smaller players, who often lack the necessary safeguards to protect it. Consequently, this data trickles into the hands of malicious users, who then use it for their personal gains.
As AT&T’s name cropped up in the investigation, management stated that fraudulent use of sensitive customer data was against corporate policies, “completely ending location aggregator work” from second-quarter 2019 onward.
Over the past year, the stock has lost 16.4% compared with the industry’s fall of 0.7%. With a focused roadmap, AT&T appears poised to turn the tables in 2019, which is likely to be a decisive year for it. Although a healthy dividend yield of 6.6% remains an enticing proposition for investors, the company needs to pull up its socks on several counts and stem the losses in case of a volte-face. If the company can significantly reduce its debt burden, plug the subscriber churn, generate solid cash flow and improve top line, it can expect a turnaround in fortunes.
Whether this Zacks Rank#3 (Hold) stock can indeed deliver on its set targets and perform to its full potential in 2019, remains to be seen. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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