AT&T Digital Life in More Markets - Analyst Blog

AT&T Inc. T announced the expansion of its Digital Life package in new markets–Anacortes, Oak Harbor and Mount Vernon in Washington, and Albany, Corvallis, Lebanon and Salem in Oregon. In 2013, AT&T entered the home security and automation service market with the launch of Digital Life package and has already gained significant market traction in this product segment. We believe the expansion of Digital Life package will eventually remain accretive to revenues and add to bottom-line growth.

The company previously stated that the market for home security services is significantly unaddressed as only 1% of U.S. households have an automated security system. As a result, the company sees financial opportunity in the $18 billion market for automated home security systems. AT&T has so far seen more success in this market compared to its peers thanks to its own technology in home security digital products and adequate marketing and promotional measures.

Apart from the expansion of new products and services, the company already enjoys strong momentum in both wireline and wireless businesses. While continued strength in smartphones is fueling growth in wireless business, wireline is benefiting from growth in its U-verse and strategic services. AT&T is the leader in WiFi (wireless broadband) connectivity with over 30,000 domestic and 190,000 international hotspots.

Other positive attributes for the company include a strategic realignment initiative and a healthy financial profile. However, persistent access line losses, competitive pressure from the likes of Verizon Communications VZ and regulatory issues will likely weigh on the stock in the coming days.

AT&T retains a Zacks Rank #3 (Hold).

Other Stocks

Better-ranked stocks in this sector include Shenandoah Telecommunications Co. SHEN and Nippon Telegraph and Telephone Corp. NTT. Both carry a Zacks Rank #1 (Strong Buy).