Stock Analysis & Valuation AT&T Inc. (SOBA.DE)

• Previous Close: €21.73
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	18.50	-15
Intrinsic value (DCF)	9.28	-57
Graham-Dodd Method		n/a
Graham Formula	10.70	-51

Strategic Investment Analysis

Company Overview

AT&T Inc. (SOBA.DE) is a global leader in telecommunications, media, and technology services, headquartered in Dallas, Texas. The company operates through its Communications and Latin America segments, offering wireless and wireline services, broadband, and entertainment solutions. AT&T serves a diverse customer base, including multinational corporations, small and mid-sized businesses, and residential users, under well-known brands like AT&T, Cricket, and AT&T Fiber. With a market capitalization of approximately €172.9 billion, AT&T is a dominant player in the Communication Services sector, leveraging its extensive infrastructure and technological advancements to maintain competitive positioning. The company's strategic focus on fiber expansion, 5G deployment, and digital transformation underscores its commitment to innovation and customer-centric solutions in an increasingly connected world.

Investment Summary

AT&T presents a mixed investment profile with both strengths and risks. The company's strong revenue base (€122.3 billion in FY 2023) and stable cash flow (€38.8 billion operating cash flow) provide a solid foundation, supported by its leadership in U.S. telecommunications. The dividend yield, with a payout of €1.06 per share, remains attractive for income-focused investors. However, AT&T's high total debt (€140.9 billion) and significant capital expenditures (€20.3 billion) pose financial risks, particularly in a rising interest rate environment. The company's beta of 0.612 suggests lower volatility compared to the broader market, but competitive pressures from rivals like Verizon and T-Mobile could impact growth. Investors should weigh AT&T's stable cash generation against its leverage and sector competition.

Competitive Analysis

AT&T holds a strong competitive position in the telecommunications industry, benefiting from its extensive network infrastructure, brand recognition, and diversified service offerings. The company's investments in 5G and fiber-optic expansion enhance its technological edge, particularly in the U.S. market. However, AT&T faces intense competition from Verizon and T-Mobile, which have aggressively expanded their 5G networks and bundled service offerings. While AT&T's enterprise and wholesale segments provide stability, its Latin America operations remain a smaller, less dominant contributor. The company's competitive advantage lies in its integrated telecom-media ecosystem, including WarnerMedia (spun off in 2022), though this also means it must continually invest to keep pace with tech and streaming rivals. Pricing pressure in wireless and broadband markets could challenge margin growth, but AT&T's scale and customer retention strategies help mitigate churn risks.

Major Competitors

• Verizon Communications Inc. (VZ): Verizon is AT&T's closest rival, with a strong focus on wireless and broadband services. It leads in 5G network coverage and reliability, which pressures AT&T's market share. However, Verizon's higher pricing and slower fiber rollout compared to AT&T could limit its growth in cost-sensitive segments. Its enterprise solutions are robust but face similar debt challenges as AT&T.
• T-Mobile US Inc. (TMUS): T-Mobile has disrupted the U.S. telecom market with aggressive pricing and rapid 5G deployment, gaining significant subscriber growth. Its merger with Sprint expanded its spectrum holdings, posing a direct threat to AT&T's wireless dominance. However, T-Mobile's weaker presence in enterprise services and fiber broadband leaves AT&T with an advantage in those areas.
• Deutsche Telekom AG (DTE.DE): Deutsche Telekom, T-Mobile's parent, operates globally but competes indirectly with AT&T in Europe. Its U.S. subsidiary (T-Mobile) is a primary competitor, while its European footprint does not overlap significantly with AT&T's core markets. The company's integrated telecom services are strong, but its U.S. growth relies heavily on T-Mobile's performance.
• Comcast Corporation (CMCSA): Comcast competes with AT&T in broadband and streaming (via Xfinity and Peacock). Its cable dominance provides stable cash flows, but its limited wireless presence (until recent MVNO expansions) reduces direct competition. AT&T's fiber and wireless bundles offer a broader ecosystem compared to Comcast's cable-centric model.