Market Overview

AT&T and Sprint Strive to Illuminate Exclusive Spectrums

Following Monday's announcement that AT&T (NYSE: T) has decided to sell off 53 percent of its Advertising Solutions business, J.P. Morgan has upgraded the telecommunications company. It is expected that T will likely see better-than-predicted revenue growth as the company will lean on its tablets for increased profits.

Further proving that Apple (NASDAQ: AAPL) governs the tablet culture, much of the wireless business is set to benefit from iPads and postpaid ARPU growth, according to J.P. Morgan. AT&T is no exception to this effect. After underperforming the S&P500 as of late, the company could use the sought-after "i" boost.

"In wireless we believe AT&T could see [better-than-expected] revenue growth from tablets and ARPU growth from its existing base via price increase efforts. Wireline could benefit from stabilizing penetration in the U-Verse footprint and a rebound in enterprise spending," J.P. Morgan said today.

One company that may cringe at this prediction is Amazon.com (NASDAQ: AMZN), as its Kindle tablet is finding itself a victim of lacking advertisements. In order to measure up to the competition, AMZN must buy in to what AT&T just sold.

"Amazon.com is not out of the woods yet. The DOJ's lawsuit against Apple and the subsequent publisher settlements only provide an opportunity for Amazon.com. Apple's continued device proliferation will continue to be a headwind for Amazon.com and its Kindle franchise. In order for Amazon.com to make the most of this new development, the company will need to invest more in both advertisement and low price points for eBooks," Morgan Stanley said in Wednesday's research report.

While AMZN must consider investing in its advertising business, AT&T sold its directories unit for $750m in cash and a $200m note. The deal comes as no surprise, as the company highlighted the possibility for a transaction to take place in its 4Q results. Bank of America recently noted that among the Directories sale, T has plans to restructure/sell rural lines that the company cannot economically defend, and wants to secure additional spectrum resources for the wireless unit.

As AT&T strives to branch out through accomplishing its various objectives one step at a time, Sprint (NYSE: S) is set to obtain a version of AAPL's LTE iPhone later this year, exclusive to S's very own LTE spectrum band.

Guggenheim shared its thoughts on Sprint's rumored iPhone.

"Not getting an LTE iPhone this year could cause Sprint to lose share to its larger postpaid peers. But if it gets an LTE iPhone, some investors seem to think Sprint would still come out the loser due to its network disadvantage," the research firm noted last month.

Where these wireless retailers would be with Apple products, nobody knows. However, it appears that without the half-bitten fruit, their struggles would be far worse.

AT&T is currently trading at $30.82, up +1.15% YoY, while Sprint is currently trading at $2.73, -42.92% YoY. AMZN is currently trading at $190.52, up +5.68% YoY.

Posted-In: Bank of AmericaAnalyst Color News Upgrades Retail Sales Topics Analyst Ratings General Best of Benzinga

 

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