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AT&T SWOT & PESTLE Analysis

ID : 5284253| Jan 2019| 25 pages

COMPANY PROFILE -AT&T

Business Sector :Telecom

Operating Geography :North America and Latin America

About AT&T :

AT&T Inc.(American Telephone and Telegraph) helps connect millions around the globe with its winning suite of entertainment, business, mobile and high speed internet services. AT&T is a public company incorporated in 1983, which provides communication and digital entertainment services primarily in the United States, along with Mexico and Latin America. They have their headquarters and corporate offices in Dallas, Texas. In 2015, AT&T acquired DIRECTV by spending $50 billion which made AT&T the world’s largest TV subscription provider. As of 2017, the company is known to have employee strength of more than 200,000 people. AT&T operates as distinct and well-established brands namely, AT&T Communications providing video broadband and voice services, AT&T Mexico for wireless business, DIRECTV as TV subscription provider and AT&T startup for premium video advertising. Though AT&T has seen continuous ups and downs in its business, its performance has been reinforced by some factors like a huge subscriber base, competitive pricing plans, low cost management, share buyback events and traction for its broadband, video and telephone services.

AT&T's mission is "To create the best entertainment and communications experiences in the world." AT&T’s vision is “to design and create in this decade the new global network, processes, and service platforms that maximize automation, allowing for a reallocation of human resources to more complex and productive work.” The USP or Unique selling proposition of AT&T is in being one of the oldest and largest provider of mobile & fixed line telephony in the US and in being the industry pioneer for offering diversified services and products in the telecommunication industry. Amongst the ranking of telecom operators based on brand value in 2018, AT&T bagged the first position with its value pegged at $82 billion.

AT&T Revenue :


US$160,546 million - FY ending 31st Dec 2017 (y-o-y negative -(2.2)%))
US $163,786 million - FY ending 31st Dec 2016

Ownership / Major shareholders :

As of April 2018, Institutional ownership of AT&T stands at $3.4 billion shares or 57.27% of shares outstanding, which is split over Other institutional (30.64%) and Mutual fund holders (26.63%).
Amongst institutional owners, the Top 5 owners are as follows:
1) The Vanguard Group, Inc. (7.08%)
2) BlackRock Fund Advisors (4.72%)
3) SSgA Funds Management, Inc. (3.96%)
4) Newport Trust Co. (3.27%)
5) Northern Trust Investments, Inc. (1.20%)

Competitive Analysis of AT&T

SWOT
PESTLE

AT&T SWOT / TOWS analysis is a framework to evaluate the internal and external factors that create an impact on the telecommunication industry and largely on AT&T Inc. AT&T's internal analysis helps to understand the strengths and weakness of the company whereas, the external analysis gives insights into the opportunities that can act as major growth drivers for AT&T and help build revenue opportunities in this digital era. The report also gives a comprehensive overview of the threats posed to the telecommunications ecosystem. Telecommunication industry is helping firms from various sectors to render online services to their customers, through digitization. Today the core purpose of mobile devices is not meant for communication only, but instead it has transformed into a life management hub. Controlling communication services in the digital era is indeed a major strength for the telecom operators.

AT&T is not only the largest telecommunication and broadband operator in the US but the world’s largest communication company in terms of revenue. AT&T’s revenue and brand position offers it a major competitive advantage, which has kept the company ahead of its competitors, consequently, AT&T is a global market leader in the telecom industry. From TV subscription provider to wired/wireless network provider AT&T offers a broad bucket of products and services.

Telecom industry has always seen ups and downs due to the rapidly changing technology and dynamic behavior of the markets and public preferences, and this weakness of telecom industry has hit AT&T too. Some of the weaknesses of AT&T are the decline in usage of landlines incurring huge financial losses in AT&T landline sector, limited market share and low margins due to high competition in the telecom sector. Despite innovative products and services, AT&T lacks flexibility in their offerings.

The external analysis shows that global expansion in emerging markets, surging demand for mobile phones that support high-speed internet especially amongst millennials, widespread usage of wireless and digital technologies leading to high demand for cloud computing are some of the big opportunities for AT&T. High competition from major competitors in terms of price and quality of services, wavering technology, high maintenance cost etc., are some of the threats impacting the external environment of the company.

The SWOT analysis for American Telephone and Telegraph company is presented below in the matrix:

Strengths
Weaknesses
1. One of the world’s biggest telecom companies
2. One of the world's largest provider of Pay TV services
3. Valuable Assets
4. R&D facilities
5. Building brand value through CSR initiatives
1. Lower Wireless Network Quality Performance
2. Largely concentrated in USA
3. Saddled with debt
4. Erosion of customer base
Opportunities
Threats
1. Growth in Embedded and Smart Devices
2. Establishment of Smart Cities and the Wearables market
3. Further acquisitions for international growth
4. Wireless service growth through partnerships
1. Fierce competition eating into its wireless subscriber base
2. Penalty from Lawsuits
3. Natural calamities puncture AT&T's bottom-line
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Detailed SWOT Analysis of AT&T

 

Strength

1. One of the world’s biggest telecom companies: AT&T is the globe's biggest telecom giant after buying DirecTV ranking #1, Global 2000 Rank #11, with a market cap of $249.3 billion as of 2017. It features on rank #9 on the 2017 Fortune 500 list and ranks #1 in Telecom in Fortune’s Most Admired Companies consecutively for the fourth year in a run. With over 99% Americans covered by AT&T, it has a whopping subscription base of 400M in North America under 4G LTE network. The Company's formidable presence spreads over 200 countrieswhere it offer mobile telephony and data services. Asof 2018, the Company serves 157 miilion wireless customers in US and Mexico which is a 14% growth over 2015, dishes out 16 million internet connections and 3 million business customers.

AT &T's operates through four key business segments, the first being Business Solutions which provides communication services to business customers and individuals subscribing to wireless services through employer-sponsored plans and clocked revenues of $69 billion in 2017.AT&T’s Entertainment Group which earned revenues of $51 billion in 2017, offers video, internet, telephony, and interactive and targeted advertising services to consumers in the U.S.A. The remaining two sectors include Consumer Mobility providing nationwide wireless service to consumer and wholesale subscribers and International offering wireless services in Mexico to consumer and business customers, and video entertainment services in Latin America via satellite technology. Each of these recorded revenues of $32 billion and $8 billion respectively for 2017.

2. One of the world's largest provider of Pay TV services: AT&T connects millions of people across the globe with state-of-the-art entertainment, mobile, high-speed internet and voice services. Currently, the company is one of the world’s largest providers of Pay TV with customers in the U.S. and 11 Latin American countries. It powers businesses across the globe tooffer enhanced customer service with mobility and highly secure cloud solutions. In 2015, AT&T had acquired DIRECTV and with this acquisition it transformed on-demand-content entertainment. With the launch of DIRECT NOW in 2016, subscribers could stream their favorite entertainment on any compatible device via the World Wide Web.The reach of DITRECT NOW is huge, it is accessible in more than 90 markets, to over 80% of America's TV users. As of 2017, they have 47 Million linear Pay TV connections including Sky Mexico and 1.2 Million DIRECTNOW subscribers. AT&T is also the leading provider of pay television services in Latin America and holds a 41% stake in Sky Mexico.

3. Valuable Assets: AT&T has multiple intangible assets – licenses, other wireless licenses and orbital slots, customer lists. It is a US-centric Company with the biggest capital investment in the country of $140 billion over the past 5 years. An ultra-fast 100% fibre network is expanded by over 80% to reach 7 million customer locales across 67 metro cities in the U.S.A. High speed fibre connections connect 1.8 million business sites in America. FCC and wireless licenses endow the company with exclusive right to utilize certain radio frequency spectrum to provide wireless communications services. Orbital slots are spaces in which the company operates the broadcast satellites that support the digital video entertainment service offerings. AT&T owns and operates more than 40,000 Wi-Fi hotspots at popular locations such as restaurants, hotels and more. AT&T’s customer lists, licenses and goodwill values have increased significantly in 2016 compared to the previous year.

4. R&D Facilities: The Company has a technology outreach program, which aims at venture capital funded start-ups, to introduce new solutions, products and applications developed by third parties. AT&T also has a research agreement with Ericsson. In 2015, the research and development expenses were $1,693 million and $1,730 million in 2014.

5. Building brand value through CSR initiatives: AT&T extended generous support during tough times of natural calamities like Hurricanes Harvey, Irma, Nate and Maria, multiple earthquakes in Mexico and wildfires across Northern California by keeping customers connected to their friends, family and businesses through free text, call and video. The company deployed its fleet of network recovery technologies to its full potential, including drones, Cell on Wheels, Cell on Light Trucks, emergency communication vehicles and portable and fixed generators. During these spate of natural disasters, AT&T provided unlimited calls, texts and data for its customers in all impacted areas. Additionally, the company rolled outmany text-to-donate initiatives for customers and internal giving campaigns for its employees in order to support recovery efforts.

AT&T is also working untiringly to improve lives though support of local communities.With their signature education program, AT&T Aspire, they invested $400 million to help provide access to education and train people to procure and maintain good jobs. Their"IT CAN WAIT" campaign has inspired 20 million pledges to never text and drive. In Mexico, AT&T is recognized as a Socially Responsible Company by the Mexican Center for Philanthropy (Cemefi) and Alliance for Corporate Social Responsibility (AliaRSE). In Latin America and the Caribbean, through Generación DIRECTV, the Company has played a pivotal role in transformation of communities, with their sturdy focus on education, volunteerism, philanthropy and sustainability through initiatives like Escuela+, Piedra, Papel and Tijera conducted over a period of more than 10 years to improve local communities.

Weakness

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Opportunity

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Threat

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Major Competitors :

Major Brands :

  • DIRECTV
  • DIRECTV NOW
  • U-Verse TV
  • AT&T Mobility
  • Vyatta
  • Game Show Network (42%)
  • Cricket Wireless
  • Quickplay Media
  • ISIS digital wallet

Key Business Segments / Diversification :

AT&T
Communication services – wireless Communication services- fixed line

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Time WarnerMass Media and EntertainmentAnnounced in 2018 – in processMergerThe merger will increase its media holdings. This merger is being valued at $85.4 billion.
FiberTower CorporationWireless Service2018AcquisitionThe acquisition gave it millimeter wave spectrum that will be put to work later in 2018 to begin the rollout of mobile 5G services.
AT&T paid $207 million to acquire FiberTower and will receive a significant footprint in the 39 GHz band, with average holdings of more than 375 MHz in the top 100 markets.
Vyatta Network Operating SystemFree Community Software2017AcquisitionThe acquisition complemented and drove the network transformation. It brought expertise in routing technologies, distributed systems, network-virtualization and software-defined services
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The SWOT and PESTEL analysis report of American Telephone and Telegraph Company (AT&T) comprises of the following:
  • Comprehensive company analysis and its brief history to gain knowledge about AT&T's profile, business model, business case and marketand corporate strategy
  • Insights into AT&T's structure, key business segments, mode of operation, target market and broad portfolio of products and services.
  • A brief overview of the AT&T's history, its headquarters, owners & stakes, and revenue jumps.
  • A glimpse of AT&Ts USP or unique selling proposition, mission statement and vision statement
  • Intelligence on AT&T’s mergers and acquisition, AT&T’s subsidiaries, capital raising and equity, partnership and alliances
  • Use of Strategic tools like SWOT and PESTLE to test waters for the telecom industry, particularly AT&T Inc.
  • In-depth analysis of internal factors- the strengths and weakness of AT&T Company
  • Strategic intelligence on opportunities based on current trends in the telecom industry.
  • Competitive analysis about AT&T, pricing pressures and the wars for capturing market share in the telecommunication industry
  • A study of external factors like political, economic, social, technological, legal and environmental and highlighting their impact on the operation of AT&T.
  • Gain understanding about the competitive advantage AT&T has over its competitors.
  • An in-depth view of the business model of AT&T Inc. further breakdown and examination of key business segments.
  • Exposure to the AT&T’s key performance indicators, success factors, value proposition and core competency.
References used in AT&T Analysis Report

1. Annual Report- https://investors.att.com/financial-reports/annual-reports/2017

2. Revenue- https://investors.att.com/financial-reports/quarterly-earnings/2018

3. Competitors- https://www.communicationstoday.co.in/the-worlds-largest-telecom-companies-2018-att-verizon-remain-on-top-as-sector-struggles/

Copyrights and Disclaimer

AT&T SWOT and PESTLE analysis has been conducted by and reviewed by senior analysts from Barakaat Consulting.

Copyright of AT&T SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

AT&T SWOT & PESTLE Analysis
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