Through TheFLY's Eyes: AT&T

from Joseph Lazzaro of Theflyonthewall.com





















AT&T: The Resurgence Of "Ma Bell"

After a landmark anti-trust decision in 1984, federal regulators broke-up the old giant "Ma Bell," AT&T (T), to spur competition, innovation, and ultimately, better services for consumers from both AT&T and those newly-created Baby Bells. More than two decades later, in an ironic and somewhat paradoxical twist, the new AT&T has reassembled a portion of its old network, and the net result may be beneficial for both investors and customers alike.

First, SBC Communications, a former Baby Bell, bought AT&T for $16 billion and took its globally-recognized name. Then, AT&T agreed to acquire BellSouth (BLS), another Baby Bell, for $67 billion. Provided that deal is approved, as expected, in Q4, AT&T will have 49 million access lines, and Cingular Wireless, the company's joint venture with BellSouth, will feature 54 million wireless subscribers -- the largest wireless carrier in the U.S. AT&T's shares closed Monday down 19c to $35.47.

However, the biggest boost for AT&T's shares in the years ahead may stem from its broadband division. As both video over the Internet and VOIP phone service functionality improves, and as more businesses and residences tap into broadband's benefits, broadband demand is expected to surge AT&T is well-positioned to leverage current clients and to register solid broadband positions in the geographic markets it currently serves.

Some analysts are even predicting a broadband shortage, given projected increases in both retail and business customers. If that occurs you can add pricing power to the list of reasons to own AT&T shares. Here's another: a solid quarterly dividend of 35.5 cents per quarter. Further, with adequate growth prospects and solid cash, it's reasonable to assume more dividend increases are up ahead - all of which makes AT&T a Buy.