Demand for wireless services is rising sharply in North America. That’s partly because device makers continue to release new cellphones and other wireless devices, like the Kobo e-book reader and Apple iPad.
As well, more customers are switching from traditional phones (or land lines) to wireless services. Smartphones, in particular, have become increasingly popular.
Today’s top-selling smartphones are Apple’s iPhone, Research in Motion’s BlackBerry, and devices that run Internet search provider Google’s Android operating system.
Look to large cap stocks that operate networks for lower-risk wireless profits
We think wireless carriers provide a conservative way for investors to profit from rising use of smartphones and other mobile devices. (In the current issue of Wall Street Stock Forecaster, our newsletter for U.S. investing, we’ve taken an in-depth look at a major wireless carrier that just made a big acquisition. Read on for more on this large cap stock’s prospects.)
That’s because, aside from wireless operations, many wireless carriers also operate traditional phone, Internet and television businesses. This diversity lowers their reliance on a single device. In addition, they get continuing revenue from their customers. That cuts their risk. Because of their diverse and steady revenue streams, wireless carriers also tend to be dividend paying stocks with attractive yields.
True Blue Chips pay off
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Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.
This large cap stock’s iPhone sales continue to rise
The company gets 50% of its revenue from its wireless division, which has 97.5 million customers in the U.S. The large cap stock’s traditional land-line operations, which supply 47% of its revenue, serve 43.7 million customers in 22 states. The remaining 2% comes from selling ads in telephone directories.
Until recently, AT&T was the exclusive U.S. carrier of Apple’s hugely popular iPhone since the device was launched in 2007. However, Apple ended its exclusive deal with AT&T in February 2011, and let Verizon Wireless start selling the iPhone.
Even so, AT&T activated nearly 3.6 million iPhones in the three months ended March 31, 2011. Of those, 23% were new customers. In all, it sold 5.5 million smartphones of all types in the quarter.
Besides the iPhone, AT&T is benefiting from rising use of other wireless devices, such as tablet computers and electronic-book readers. The company added 1.3 million of these customers in the latest quarter. It now has 10.6 million non-phone wireless subscribers, up 83.3% from a year earlier.
T-Mobile takeover would make AT&T the biggest wireless carrier in the U.S.
The company recently agreed to purchase rival U.S. wireless carrier T-Mobile from Germany’s Deutsche Telekom AG. The purchase would make AT&T the largest wireless carrier in the U.S., with over 130 million subscribers.
This is a big purchase for AT&T. The company will pay $39 billion for T-Mobile, consisting of $25 billion in cash and $14 billion in stock. That will give Deutsche Telekom an 8% stake in AT&T. Regulators will probably take several months to approve the deal.
Get our full analysis of AT&T—including our clear buy/sell/hold advice—FREE
As I mentioned, we’ve taken a fresh look at AT&T in the latest issue of Wall Street Stock Forecaster (which you can immediately download when you take a no-risk 1-month free trial to the publication). Growth by acquisition can add considerable risk, and the T-Mobile acquisition is no exception. Our analysis also looks at the company’s strategy for dealing with increased iPhone competition. We’ve concluded our analysis with clear advice on whether you should buy, hold — or sell — the shares.
Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' FREE Special Report from The Successful Investor.
Canadian Blue Chip Stocks:
Bank of Nova Scotia, CP Rail, CAE Inc. and more.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
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