DALLAS & CORNING, N.Y. - AT&T (NYSE:T), a leading fiber internet provider in the United States, has entered into a multi-year purchasing agreement with Corning Incorporated (NYSE:GLW), valued at over $1 billion. The deal is aimed at providing next-generation fiber, cable, and connectivity solutions to expand AT&T's fiber network, which is anticipated to bring high-speed internet to a broader American audience.
Under the agreement, AT&T will adopt Corning's Evolv® portfolio, including the Evolv® FlexNAP™ system with Multifiber Pushlok® Technology. This technology aligns with the Build America, Buy America provisions of the Broadband Equity, Access, and Deployment program (BEAD), ensuring compliance with federal requirements.
John Stankey, CEO of AT&T, highlighted the significance of the partnership, stating that it will help connect more households, communities, and businesses with essential high-speed internet. Wendell P. Weeks, chairman and CEO of Corning Incorporated, reiterated the transformative benefits of fiber connectivity and the shared vision of creating value by connecting people.
This collaboration is not new; AT&T and Corning have a longstanding relationship, with AT&T being Corning's largest customer with preferential volume status for connectivity solutions. This status enables AT&T to enhance network performance while minimizing deployment costs effectively.
The expansion of AT&T's network is part of a broader strategy that includes organic investment, the Gigapower joint venture with BlackRock (NYSE:BLK), and several commercial open-access agreements. The company has seen consistent growth in its broadband subscriber base, with the network reaching over 28.3 million consumer and business locations. AT&T is on track to surpass 30 million locations by the end of 2025.
This expansion effort by AT&T is set against a backdrop of increasing data and bandwidth demands across the country. The collaboration with Corning is poised to play a crucial role in addressing these needs by leveraging Corning's expertise in materials science and optical physics.
The information for this report is based on a press release statement.
In other recent news, AT&T has presented mixed results in its third-quarter 2024 earnings report. The telecom giant matched expectations overall, but some areas fell short, such as equipment revenue and phone additions. Still, AT&T outperformed in average revenue per user (ARPU), a key industry metric. The company's financials were supported by strong free cash flow, despite a lower number of fiber additions and reduced guidance for the Business Wireline segment.
AT&T also reported solid financial results with significant growth in high-value wireless and broadband subscribers. The company added 403,000 postpaid phone subscribers and saw a 6% EBITDA growth in its Mobility segment. Total revenues stood at $29 billion, with capital expenditures increasing to $5.3 billion, reflecting the company's commitment to wireless network modernization.
In the realm of analyst upgrades and downgrades, TD Cowen has maintained a Hold rating on AT&T shares, raising the price target to $26.00 from the previous $23.00. Oppenheimer also raised its price target for the company to $24, maintaining an Outperform rating, influenced by AT&T's strong quarterly performance, broadband subscriber growth, and progress in reducing debt. However, both firms noted potential challenges in achieving free cash flow growth for the coming year, primarily due to uncertainties surrounding the DIRECTV stream service.
InvestingPro Insights
AT&T's recent $1 billion agreement with Corning aligns well with its financial performance and market position. According to InvestingPro data, AT&T boasts a substantial market capitalization of $156.61 billion, underlining its significant presence in the telecommunications sector. The company's revenue for the last twelve months as of Q3 2024 stood at an impressive $122.06 billion, reflecting its strong market position.
An InvestingPro Tip highlights that AT&T has maintained dividend payments for 41 consecutive years, demonstrating a commitment to shareholder returns that complements its investment in network expansion. This is further supported by the current dividend yield of 5.08%, which may attract income-focused investors.
The company's focus on expanding its fiber network appears to be resonating with the market. InvestingPro data shows a robust 56.41% price total return over the past year, with the stock trading near its 52-week high at 96.68% of that level. This positive momentum suggests investor confidence in AT&T's strategic direction, including its partnership with Corning.
For readers interested in a deeper analysis, InvestingPro offers 12 additional tips for AT&T, providing a comprehensive view of the company's financial health and market position.
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