Summary
- AT&T's Latin America business is a lemon, but you know what they say about when life gives you lemons.
- AT&T Wireless is far more than postpaid subscribers. This misunderstanding spells opportunity.
- AT&T is focused on retiring debt, are its projections for 2019 realistic? Yes.
AT&T (NYSE: T) isn’t what most investors would call a sexy stock. The shares tend to trade in a range, they are never going to make a list of fastest growing companies, yet every portfolio can use some reliable growth and income. Investors who are living off dividend checks should have AT&T near the top of their buy list. For investors who favor fast growth stocks, a stable dividend-paying company can help smooth out the rough ride of the market. Though AT&T seems to have made it out of the doldrums of the end of 2018, the shares still look like an incredible deal.
When life gives you lemons…
AT&T has a lot of moving pieces. The two divisions that get the most headlines are its wireless business and the newly acquired WarnerMedia. The Latin America division has become almost an afterthought. However, this business seems to offer investors an opportunity.
The old saying is when life gives you lemons, make lemonade. There is no nice way to say this: the Latin America business is a lemon at present. In the last quarter, revenue from this business declined nearly 17% annually. The video entertainment side of the house got crushed with a near 23% annual decline in revenue. The wireless side didn’t fare much better, with revenue dropping by just over 12%. In addition, the division’s EBITDA margin nearly disappeared, moving from 12.6% last year to just 2.1% in the current quarter.
