AT&T Needs To Strengthen Brand To Improve Value: Jeff Kagan

Image: CEO John Stankey. Source: AT&T

It is good to see that new AT&T CEO John Stankey understands how damaged the master brand is today. The company needs to repair, rebuild and strengthen the AT&T brand for growth going forward. This brand has been damaged over the last decade, and that has impacted the value of the company. So, what are the chances of success, and when can we expect to see increased value at Ma Bell?

This ship will take a while to turn around even if everything is done right to repair and rebuild the brand, but the key move can and should be made instantly. Then simply let the marketplace figure it out.

Verizon Wireless, AT&T Mobility, T-Mobile, Sprint

This is what T-Mobile did. The company was dying on the vine a decade ago as the marketplace shifted from 2G to 3G. T-Mobile sat it out. That was a mistake, and Verizon Wireless, AT&T Mobility and Sprint moved ahead.

It took hiring a new CEO with a new vision. John Legere transformed the company overnight. Then it took several years for the marketplace to get it. Ultimately, it did, and today T-Mobile is strong.

The path AT&T must take moving forward

That’s the path AT&T must take today. It was once one of the best known and most powerful and respected brands in the world.

That time, however, was back in the 1980s and early 1990s.

The company has gone through massive changes in the last decade or two.

Let’s recall the path AT&T has been on during that time.

Until it was broken up roughly 50 years ago, AT&T was the nation's phone company. It was Ma Bell, delivering local and long distance communication from coast to coast.

Next, MCI entered the picture and changed the entire industry. It was soon followed by Sprint.

As a result, AT&T was broken up in the mid 1980s. It was split up. AT&T kept long distance and competed with MCI, Sprint and countless others. Seven Baby Bells broke away as local service providers.

In the following years, the Baby Bells grew and merged. At the same time, the power of AT&T was diluted, year after year.

In the late 1990s, AT&T made one last ditch attempt to grow and acquired TCI, which was the largest cable TV company in the country out of Denver.

Comcast acquired TCI from AT&T making it the largest in cable TV

That was a brief and shining moment for the company, but it ultimately failed. The AT&T that was left was a shell of its former self. It eventually sold the giant cable television operation to Comcast, making it the largest in the country.

Most people don’t remember this, but around 2004, SBC, which was the smallest Baby Bell, acquired the much smaller and weaker AT&T along with BellSouth and Cingular, and took the name AT&T.

This transformed the dying Ma Bell into a telecommunications powerhouse once again.

Then during the last decade, in a search for the next generation of growth to please shareholders, AT&T started getting into the television industry and ultimately lost its way once again.

In recent years the company has had a hell of a time creating a real and meaningful master brand strategy.

It didn’t know what to call itself, as it was juggling telephone, wireless, Internet, satellite TV, cable TV, pay TV movies, news, entertainment and more.

AT&T Master Brand was lost in a spaghetti junction

The AT&T brand was lost in a spaghetti junction, spinning in circles and going nowhere.

The company moved into television and movies and more, but the weight of acquiring DirecTV, Warner Brothers, CNN and other entities ultimately caused insurmountable financial pressure.

John Stankey recently took over as CEO and has had his hands full trying to right the ship.

Over time, I have heard from so many executives at AT&T, workers and regular folks, all wondering why the company value has been low for so long.

The challenge AT&T CEO John Stankey has on his plate

It’s very good that the CEO understands the problems and pressure with the company and the brand. The brand has been tarnished and weakened over the last decade and its plans for expansion have collapsed.

That all needs to be rebuilt.

Just as importantly, the company needs to rebuild its brand.

If it can rebuild its brand and rebuild the company, AT&T could once again become a "shining city on the hill."

Can AT&T become the Shining City on the Hill once again?

Knowing there is a problem is the first step. The next step is equally important. It is knowing what to do next in order to rebuild and regain past glory.

So far, AT&T has been cutting costs every which way but loose like creepy Jason from the Halloween movies swinging a chainsaw.

AT&T may think this is the best way to cut costs, but it is making a mistake. The company currently is cutting more than the fat.

It is cutting critical parts that need to be kept alive to help the company recover.

Management needs to take a more measured approach to what it will cut and what it will continue to fund. Without that discipline, the road to recovery will be much more difficult and lengthier.

AT&T recovery should start immediately

I’ll keep watching and writing about what I see, if AT&T is changing direction and making the right moves. Only then will it be able to start the long journey to recovery.

Recovery will take a while, but it can and should start immediately. Then let the marketplace figure out what you are doing and what your new path is and recognize your progress. Remember the T-Mobile path to success described earlier in this piece.

Knowing what needs to be done and starting that new direction can happen in a moment. I am happy the CEO understands the problem. Let’s hope he understands the solution as well.

Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, TeleHealth, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and on LinkedIn at www.linkedin.com/in/jeff-kagan/.

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Equities News Columnist: Jeff Kagan

Source: Equities News