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AT&T (T) to Phase Out U-verse Brand, Upgrade Plans


U.S. telecom behemoth AT&T Inc. T has decided to systematically phase out its long-standing U-verse brand, which consists of fiber-based triple-play video (TV), voice (telephony) and high-speed broadband (Internet) offerings. After acquiring DIRECTV, the largest satellite TV service provider in the U.S., AT&T is driving its new TV customers to DIRECTV’s offerings instead of its own U-verse TV offering. Although the company is supporting its existing U-verse IPTV subscribers, it is not clear how long AT&T will continue with fiber-based TV offering.

Recently, AT&T announced that the company will also terminate its U-verse broadband and voice brands. Existing subscribers of 45 Mbps broadband plan will now receive the service referred to as "AT&T Internet" and the tier named AT&T "internet 45." Similarly, the U-verse voice service will be renamed as "AT&T Phone." Notably, customers will get Internet speed, voice plans and prices similar to that of U-verse.

In the future, even the DIRECTV satellite TV brand will be renamed as “AT&T Entertainment”, symbolizing the company’s transition to a single entertainment portfolio. However, this transition will not happen until AT&T launches its next-generation Internet TV service which offers video streaming. Leading telecom and TV operators such as Verizon Communications Inc. VZ, DISH Network Corp. DISH and Comcast Corp. CMCSA have already launched their TV streaming services.

In the second quarter of 2016, AT&T gained 342,000 satellite TV subscribers but lost 391,000 fiber-based U-verse TV subscribers. The company is strategically shifting its TV U-verse customers to the DIRECTV brand. This move will free up very important bandwidth on its fiber-optic network, which AT&T can utilize to offer higher data transmission speeds to its high-speed broadband users. AT&T ended the second quarter of 2016 with nearly 14.2 million such customers.

AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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