Mobile carrier AT&T is looking into offering wireless phone plans, which would be partially subsidized by advertising as soon as next year or in the year after, according to a Reuters interview with CEO John Stankey.
AT&T’s (T) CEO said “ I believe there’s a segment of our customer base where given a choice, they would take some load of advertising for a $5 or $10 reduction in their mobile bill.” Meanwhile, AT&T has a planned launch of an ad-supported version of its video-streaming service HBO Max next year. Stankey believes that it will serve as a “foundational element” to the new phone plans.
However, as AT&T’s advertising marketplace uses data from outside the carrier, Stankey is doubtful if the company can use external data for ads “in perpetuity.” The move could raise privacy concerns as to how tech giants use their information, according to the report. (See T stock analysis on TipRanks).
On August 31, Scotiabank analyst Jeff Fan downgraded AT&T stock to Sell from Hold and lowered the price target to $30 (3% upside potential) from $34. The analyst said that the stock “may look attractively valued on an absolute basis and relative to its peers, [but] we think it will remain cheap until T can stem its wireless share loss and/or undergo a significant structural change to its asset mix, which is currently burdened by the exposure to DirecTV.”
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 7 Buys, 3 Holds, and 1 Sell. The average price target of $33.78 implies upside potential of 16% to current levels. Shares have declined 25.5% year-to-date.