Stock Spotlight: AT&T
FILMED IN OCTOBER 2025
GQG’s Brian Kersmanc sees renewed potential in AT&T as 5G spending eases and broadband growth accelerates.
00:00:11:20 - 00:00:15:15 AT&T is a telecommunications company in the United States. 00:00:15:15 - 00:00:21:01 It's part of a three player market at this point in time, with Verizon and T-Mobile. 00:00:21:01 - 00:00:25:15 They're the third largest in terms of the number of subscribers that they have on their network. 00:00:25:15 - 00:00:28:06 They provide wireless and broadband services. 00:00:28:06 - 00:00:31:05 What's interesting about this is it’s a utility-like asset. 00:00:31:05 - 00:00:35:21 So you go and you pay your telephone bill and you’re subscribed to your broadband access 00:00:35:21 - 00:00:38:16 and it becomes a very sticky product over the course of time. 00:00:38:16 - 00:00:41:02 It's very cash generative of over the course of time as well. 00:00:41:02 - 00:00:46:01 Telecommunications services are a very basic need and utility and in the modern world. 00:00:46:01 - 00:00:48:24 This facilitates what we do on a day to day basis 00:00:48:24 - 00:00:51:17 communicating, for work, for personal use. 00:00:51:17 - 00:00:55:07 It gives us valuable data on the go when we're trying to research 00:00:55:07 - 00:00:57:24 where we're going out to eat or how we get somewhere, 00:00:57:24 - 00:01:00:24 how we need to pull maps up on our cell phones and things like that. 00:01:00:24 - 00:01:06:08 So it's a viable underpinning of today's modern infrastructure and the modern world. 00:01:06:08 - 00:01:10:20 For AT&T the addressable market is kind of split into two categories. 00:01:10:20 - 00:01:16:07 Number one is the wireless side of the business, where there's about 600 million wireless subscribers in the US. 00:01:16:07 - 00:01:22:07 That's split between three providers T-Mobile and Verizon are the other two. 00:01:22:07 - 00:01:25:21 AT&T and these other two are trying to vie for share and 00:01:25:21 - 00:01:28:06 jockeying for that share and that share shift over the course of time. 00:01:28:06 - 00:01:32:12 But largely it's a slow, steady, growing market overall. 00:01:32:12 - 00:01:36:10 The more interesting aspect is on the broadband side of the business 00:01:36:10 - 00:01:40:01 where AT&T is trying to address close to 90 million subscribers 00:01:40:01 - 00:01:41:06 on that side of the business 00:01:41:06 - 00:01:46:17 and they're taking share away from the classic wireline duopolies 00:01:46:17 - 00:01:50:13 that are in place right now with their fibre that they've been laying out over the past several years. 00:01:50:13 - 00:01:52:21 AT&T is an interesting investment here 00:01:52:21 - 00:01:56:05 because it's been relatively unloved over the past several years. 00:01:56:05 - 00:02:02:10 All of the telcos within the US and globally have gone through this massive 5G capex ramping cycle. 00:02:02:10 - 00:02:06:08 Over the course of time, they spent a lot of money to hang up new radios, new equipment 00:02:06:08 - 00:02:11:10 to spend on spectrum and things like that to really get themselves up to speed for 5G. 00:02:11:10 - 00:02:13:23 Unfortunately, the market has not necessarily paid 00:02:13:23 - 00:02:17:20 for the 5G upgrades and investments that they've done over the course of time 00:02:17:20 - 00:02:21:07 and in fact the telcos have really competed with each other on price 00:02:21:07 - 00:02:24:19 and really hurt each other in terms of that pricing dynamic. 00:02:24:19 - 00:02:27:11 So what's interesting now is though that spending is largely 00:02:27:11 - 00:02:30:15 over for the capex cycle for 5G. 00:02:30:15 - 00:02:33:20 So the cash flows will naturally improve because you don't have that spending. 00:02:33:20 - 00:02:35:13 It's all done and behind you 00:02:35:13 - 00:02:40:22 and the other interesting aspect of what we're seeing right now is all three telcos in the US are actually raising prices. 00:02:40:22 - 00:02:44:21 A lot of that cash drops down to the bottom line, because it's a fixed asset 00:02:44:21 - 00:02:48:08 that you're raising that cash against on the other side. 00:02:48:08 - 00:02:51:21 The other incremental opportunity that's very interesting for AT&T 00:02:51:21 - 00:02:55:05 is that they're aggressively going into the broadband side of the business as well 00:02:55:05 - 00:03:00:03 where there's been a lazy duopoly on the wireline side of the business for a very long time 00:03:00:03 - 00:03:04:09 and AT&T has been aggressively laying down fibre optic cable which is an equivalent, 00:03:04:09 - 00:03:08:16 if not better solution than what's out there and aggressively taking share from these two other carriers.
Transcript
AT&T is a telecommunications company in the United States. It's part of a three player market at this point in time, with Verizon and T-Mobile. They're the third largest in terms of the number of subscribers that they have on their network. They provide wireless and broadband services.
What's interesting about this is it’s a utility-like asset. So you go and you pay your telephone bill and you’re subscribed to your broadband access and it becomes a very sticky product over the course of time. It's very cash generative over the course of time as well.
Telecommunications services are a very basic need and utility in the modern world. This facilitates what we do on a day to day basis communicating, for work, for personal use. It gives us valuable data on the go when we're trying to research where we're going out to eat or how we get somewhere, how we need to pull maps up on our cell phones and things like that. So it's a viable underpinning of today's modern infrastructure and the modern world.
For AT&T the addressable market is kind of split into two categories. Number one is the wireless side of the business, where there's about 600 million wireless subscribers in the US. That's split between three providers — T-Mobile and Verizon are the other two. AT&T and these other two are trying to vie for share and jockeying for that share and that share shift over the course of time. But largely it's a slow, steady, growing market overall.
The more interesting aspect is on the broadband side of the business where AT&T is trying to address close to 90 million subscribers on that side of the business and they're taking share away from the classic wireline duopolies that are in place right now with their fibre that they've been laying out over the past several years. AT&T is an interesting investment here because it's been relatively unloved over the past several years. All of the telcos within the US and globally have gone through this massive 5G capex ramping cycle. Over the course of time, they spent a lot of money to hang up new radios, new equipment, to spend on spectrum and things like that to really get themselves up to speed for 5G.
Unfortunately, the market has not necessarily paid for the 5G upgrades and investments that they've done over the course of time and in fact the telcos have really competed with each other on price and really hurt each other in terms of that pricing dynamic. So what's interesting now is that spending is largely over for the capex cycle for 5G. So the cash flows will naturally improve because you don't have that spending. It's all done and behind you, and the other interesting aspect of what we're seeing right now is all three telcos in the US are actually raising prices. A lot of that cash drops down to the bottom line, because it's a fixed asset that you're raising that cash against on the other side.
The other incremental opportunity that's very interesting for AT&T is that they're aggressively going into the broadband side of the business as well where there's been a lazy duopoly on the wireline side of the business for a very long time and AT&T has been aggressively laying down fibre optic cable which is an equivalent, if not better, solution than what's out there and aggressively taking share from these two other carriers.