AT&T Digital Life Spreads Wings - Analyst Blog

AT&T Inc. T announced the expansion of its Digital Life package in six new markets – Beaumont, Omaha, Toledo, Greenville, Cape Coral, and Oxnard. With the latest launches, AT&T's Digital Life is now available in 81 markets. We believe the expansion of the Digital Life package will eventually remain accretive to revenues while also adding to bottom-line growth.

In 2013, AT&T entered the home security and automation service market with the launch of its Digital Life package. Since then, it has already gained significant market traction in this product segment.

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 ample financial opportunity in the $18 billion market for automated home security systems. AT&T has so far seen greater 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 its Wireline and Wireless businesses. While continued strength in smartphones is fueling growth in the 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 Sprint Corporation S, and regulatory issues will likely weigh on the stock in the coming days.

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

Other Stocks

A better-ranked stock worth considering in this sector is Level 3 Communications, Inc. LVLT with a Zacks Rank #1 (Strong Buy).