AT&T, the American multinational conglomerate, is implementing a strategy aimed at saving $2 billion over the next three years. This initiative follows a $6 billion cost-cutting program, which was supported by the shutdown of older networks. The company's new strategy includes almost full coverage of major cities in America, Canada, and Mexico with its 5G wireless network.
Notably, AT&T has witnessed growth in postpaid wireless contracts and Internet of Things (IoT) connections, even in a challenging period marked by the WarnerMedia spinoff into Warner Bros. Discovery (NASDAQ:WBD) and losing broadband customers. The company's recent growth in the second quarter, according to InvestingPro data, came from higher service prices rather than new subscribers, with a revenue of 121.44B USD and a gross profit of 71.51B USD.
AT&T's shares are currently trading near a 30-year low, well below rivals Verizon (NYSE:VZ) and T-Mobile US (NASDAQ:TMUS). The stock has dropped 32% from its early 2020 peak and yielded negative returns of 67% since its 1999 peak. The current dividend yield stands at 7.5%, significantly lower than the double-digit yields seen in previous years. Following the WarnerMedia spinoff, AT&T halved its quarterly dividend payouts, indicating financial instability. According to InvestingPro data, the company's dividend yield as of 2023 was 7.7%.
The company also faces potential legal issues stemming from a lead-based cable scandal that could cause severe financial damage and harm its reputation as an environmentally conscious business.
While the low price and high dividend yield might be attractive, AT&T's high long-term debt and negative financial trends have led some to perceive it as a risky investment. According to InvestingPro Tips, the company's short-term obligations exceed its liquid assets. Yet, it's important to note that AT&T has maintained dividend payments for 40 consecutive years and is a prominent player in the Diversified Telecommunication Services industry.
InvestingPro also provides additional tips and real-time metrics for investors looking to make informed decisions. For instance, the company's market cap stands at 104.1B USD, and the P/E Ratio (Adjusted) for 2023 Q2 is 6.89. The company's fair value, according to InvestingPro, is 17.77 USD. For more insights, check out InvestingPro for additional tips and metrics.
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