Jeff Kagan: What Do AT&T Leadership Changes Mean?

Jeff Kagan |

at&t restructuring, at&t growth strategy, at&t stock price, at&t versus cable

AT&T (T) has enjoyed a very successful run over the last decade. Now the industry and competition is starting to change once again. AT&T sees this and has been making some changes themselves. Let’s explore what changes AT&T is making in leadership and direction going forward and consider the impact on the company and the industry.

AT&T is merging its wireless and business units into one company. That company will be led by Ralph de la Vega, who was the CEO of AT&T Mobility. Glenn Lurie will replace de la Vega and now lead AT&T Mobility. He headed their emerging enterprises and partnerships unit.

Why all the changes? The easiest answer is the industry continues to change and AT&T needs to continue to reshape itself to remain successful. AT&T has been very successful the last decade and I think these changes say they want to repeat that performance.

New technology and new competition creates forces that could be costly to any company who is not ahead of the curve. That’s the reason I think, that AT&T is making this move now. They are preparing themselves for the next wave of the competitive battle.

One threat is how the cable television companies continue to try and build their business segment. As companies like Comcast, Time Warner Cable and Cox lose consumers to new competitors like AT&T Uverse, Verizon FiOS (VZ) and CenturyLink Prism (CTL) , they are also trying to find new areas of growth. Business services is one of the areas they are focused on.

Plus Comcast (CMCSA) is trying to acquire Time Warner Cable (TWC) . If they are successful, this would create the largest and most powerful competitor in the mix against everyone else.

I think we will start to see more of a blending of wireless and wire line services going forward. AT&T is one of a very few companies who can do this by offering a wide variety of wireless, wire line, Internet and television services.

So as we go through the next several years, the industry will continue to change. Carriers will offer more services and these services will work together.

That means customers will be able to choose one company and say goodbye to the rest. That’s the big opportunity and threat every competitor faces.

AT&T is also in the process of trying to acquire DirecTV (DTV) . This would give them the ability to start offering services on a nationwide basis, which is a big growth opportunity for them going forward.

AT&T has an advantage today in this marketplace against the cable television industry. AT&T Mobility is a significant advantage as a separate service and as a combined service, which will become clear as the next few years pass.

Will other competitors like the cable television industry get into wireless? That’s the question. They tried once and failed. Not every carrier is into wireless. Of the top three telephone companies, only AT&T and Verizon are. CenturyLink is not.

So we’ll have to watch how this industry plays itself out over the next decade. Things are getting very interesting again. Actually, they never stopped. And AT&T is refocusing on the new opportunities and challenges.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TWC Time Warner Cable Inc n/a n/a n/a 0
VZ Verizon Communications Inc. 50.51 0.15 0.30 1,801,394
CTL CenturyLink Inc. 24.19 0.18 0.75 508,626
T AT&T Inc. 39.63 0.28 0.70 3,033,002
CMCSA Comcast Corporation Class A Common Stock 68.32 -0.38 -0.55 921,479

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