After a strong rally this year, AT&T (T), along with wireless duopoly cohort Verizon (VZ), suddenly faces some serious threats to its competitive advantage. In a low interest rate environment, investors have continued to chase the yield on AT&T, pushing the dividend down to 4.7% while competitors are in the process of launching an attack.
As highlighted in this article last week, the huge gains in the domestic cable and wireless stocks have gotten ahead of reality. Those gains were partially based on an environment of limited competition. This could dramatically shift with the rumors of a Sprint (S) investment by SoftBank and the pending merger of T-Mobile (DTEGY.PK) and MetroPCS (PCS). Suddenly, the weak domestic wireless providers have become a threat to the cushy life of the duopoly.
Not to mention, the news gets even worse for AT&T, as Verizon continues to capture market share with a more advanced 4G network.
Read the full article at Seeking Alpha.
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