Will AT&T Inc. (NYSE:T) Finally Acquire Time Warner This Month?

September 28, 2017, 09:18 am ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

A recent leak from the Department of Justice indicates that the AT&T Inc. (NYSE:T) merger with Time Warner is expected to close by end of September. However, the company has strong fundamentals whether or not the Time Warner deal is confirmed.

The acquisition of Time Warner Inc (NYSE:TWX) is a strategic move on AT&T’s part as it seeks to consolidate the communication and entertainment industry dominance of the two companies. This acquisition will allow AT&T to produce and distribute content across different media, which will boost the company’s overall revenues.

AT&T will have a significant advantage over its main rival Verizon Communications Inc. (NYSE:VZ) if the acquisition is successful. The merger will allow AT&T to boost its revenues in a manner that is almost impossible to accomplish within the telecommunication industry.

Time Warner has had a good year at the Box Office so far with the release of Wonder Woman, Dunkirk and Annabelle: Creation. The three films competed closely with Walt Disney’s trio domestically and international given that the company is recovering from the bad reviews generated by its previous films Batman v Superman: Dawn of Justice, and Suicide Squad.

AT&T is also doing a lot to upgrade its wireless network as it is in the process of rolling out its 5G Network. The company has also instituted several cost-cutting measures that have resulted in higher earnings for the company.

The company’s main target is to attract more subscribers to its network given that many wireless customers rate high internet speeds as a determining factor in their choice of a mobile carrier. Therefore, AT&T significant capital investment in its 5G network is likely to attract more subscribers given that the company added 2.3 million subscribers in Q2 2017.

AT&T is also a god dividend stock as it pays a 5.2% dividend, which is one of the highest in the S&P 500 as well as when compared to other telephone carriers. The company’s stable dividend might be enough reason for dividend investors to buy AT&T shares.

AT&T is doing a lot of things right including rolling out its 5G network, merging with Time Warner and cutting operating costs. Therefore, the question remains whether the company is a good buy at its current price and valuation.

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