Here In this article, we will see the AT&T SWOT Analysis
Introduction
In January 2011, AT&T said it would stop subsidizing phone service to low-income customers in favor of providing mobile data plans with unlimited phone calls, text messaging, and data access. AT&T was one of the major creators of the United States’ first three-tier telephone system.
From 1907 until it acquired Bell System, AT&T was one of the “Big Four” American telephone companies. From its launch in 1885 until 2006, AT&T was headquartered at 711 Eighth Avenue in New York City, and it was the headquarters of its successor company, “American Telephone and Telegraph Company.”
The AT&T logo was said to be seen in New York even before the building became a city icon. AT&T, originally founded by Alexander Graham Bell, has played an instrumental role in the history of telecommunications.
SWOT Analysis of AT&T
Strengths of AT&T
An industry leader in wireline
AT&T’s wireline business is known for ensuring its customers stay on par with the technological changes of the market. Fiber-based broadband is taking over, and it was vital for the company to keep up with the times.
Apart from being a top player in the global telecommunications industry, AT&T has established itself as an industry leader through their fiber-optic network, which they have put across the U.S. This network allows for large enterprises to have access to the internet along with smaller businesses.
It is also a fantastic network for helping small businesses and startups to enter the market. A good example of this is the U.S. startup “Pluribus Networks” founded by AT&T employees in 2014.
Business portfolio
Another strength of the company is that it has managed to maintain or increase its capital expenditure and wireless net adds. The only trouble has been a decline in wireless connections. AT&T has a diverse business portfolio and is much more than a mobile carrier.
These types of businesses have become larger and more lucrative thanks to the growth in the technology industry. As a result, a couple of companies have achieved a similar size to AT&T in terms of market capitalization.
Alphabet and Microsoft are the others. In addition, AT&T has a diversified portfolio of subsidiaries, a key factor for stability and sustainability in a market like the internet of things.
Wireless business
Data and service of mobility and wireless broadband access is a leader in the U.S., with an estimated operating profit of $9.5 bn and an operating margin of 7.7%. It is expected that the business will contribute $17 bn in operating profit, an increase of 38.7% from the previous year.
Information is from the data service portal AT&T unlimited plans. This shows that their policy is to provide data that is cheaper than the competition and, above all, to meet the customers’ demands.
AT&T business employees include AT&T HotSpot and AT&T small business – when using hotspots, this is met with a $3.95 flat rate. It is in place for both residential and small business customers.
Weaknesses of AT&T
Hiring unprofitable workers
AT&T was one of the leading companies in the U.S. for employing poor-quality workers. The company hired 80,000 employees in 2015, when the revenue was $167.2 billion. It was a huge mistake on the part of the company.
The unemployment rate is at a record low. As a result, the company should have continued to hire only the best people.
International competitors
AT&T has lost the edge over its competitors, such as Verizon and T-Mobile. As a result, AT&T’s mobile operating margins in the first half of FY2016 decreased to 26.5% from 32.6% in the previous year. The decrease shows that the company is struggling in the mobile market and can not compete with the other competitors.
To break the reign of the competitors, AT&T will have to step in with some new developments and innovations.
Redesign and modernization of its network
The company has a network that is already outdated and did not evolve with the technologies. The network still needs some changes to catch up with the recent advancements. AT&T needs to invest a lot of money in their network, limiting the number of network upgrades they can make shortly.
Opportunities of AT&T
Improving infrastructure capability
The telecom industry is in the midst of an acquisition frenzy. AT&T was a pioneer in wireless and video, as it is expected to continue to follow the same path of expansion by further acquisitions and product diversification.
In 2016, the company signed a deal with “Samsung Electronics” to support the Gear S3 smartwatch. It was one of the largest deals that AT&T has signed, as they have developed a reputation for doing that.
AT&T invested a lot in acquisitions as it faces off with new and old competitors. For example, the company may buy “Time Warner Inc” as it expands further into media.
Wireless services
Wireless services are now considered to be the basic requirement for the digital lifestyle. Thus, AT&T would have to focus on networking its customer base by providing them with the latest technology to stay ahead of the competition.
Additionally, the company can compete on a host of other parameters such as broadband usage, network performance, reliability, customer satisfaction, or cutting-edge technologies such as 5G, IoT, and cloud computing.
One can’t expect an outsider company to create a dominant position, as AT&T is a dominant player in wireless services. Thus, careful research by industry experts, sector experts, and the company’s executive management will be critical for taking the company ahead in the future.
Threats of AT&T
Threat of saturation
The company has been battling with the saturation in its networks in their domestic market and has to launch its services in more than 90 markets.
Threat of competition
The competition will make it very difficult for the company to maintain its margins in the coming years. The wireless industry has several players, and the key players include Verizon Wireless, AT&T, Sprint, T-Mobile, U.S. Cellular, C Spire, Cricket, Tracfone, and Cellular One.
The threat of competitors arises when one of these players becomes more attractive to the consumer than the other. With an entry of a new player, the existing players are expected to react to defend their market share and customers.
Verizon is already facing fierce competition from AT&T and T-Mobile. And now it has faced a threat from T-Mobile. Even though AT&T has lagged in 4G network rollouts, T-Mobile has been the main driver in this regard.
It has been reported that Verizon is currently working on its 4G LTE network to catch up with T-Mobile.
Threat of regulations
The threat of regulation in the future will affect the company in terms of its valuation and revenues. Any American company investing in foreign operations has to abide by U.S. laws. Therefore, AT&T, for example, needs to file its licensing applications and taxes with the government to receive approval for its international operations.
In the form of the terms and conditions, AT&T agrees with the U.S. government to refrain from making unethical actions, such as spying and data tapping of the American population in the country.
Such regulations would make AT&T more cautious and concentrate on profits. The last thing the company wants is to lose the subscribers.
AT&T’s competitors
AT&T’s overall competitive advantages are:
- Its national and international scale.
- High market penetration.
- Long-term business strategies.
- Technologically advanced networks.
- Leading spectrum portfolio.
- Fiber networks.
- 4 G LTE technology.
The company has strengthened its global footprint with operations in Latin America and Europe. During the second quarter of fiscal 2019, AT&T’s wireless operating revenues increased 3.5% year over year to $21.9 billion.
The company’s mobile wireless net additions were 2.27 million in the second quarter. AT&T’s total wireless adjusted operating revenues for the second quarter of fiscal 2019 increased by 6.3% year over year to $22.3 billion. The company’s operating income for the quarter decreased 16.8% year over year to $3.
Who is better?
Based on the previous sections, AT&T’s subscriber numbers exceed those of Verizon Wireless. However, based on a more fundamental look at the wireless, wireline, and video markets, there are many more reasons to prefer Verizon over AT&T.
Verizon has been the first mover in wireless, building out the infrastructure and taking an early position in the market, while AT&T is getting around to building out its network. The standard trend in wireless is to bring down costs and improve network quality.
This is especially important in the highly competitive mobile business, which results in a high return on capital and low capital intensity. However, AT&T is slowly catching up and will, in time, become a formidable competitor.
How do they compare?
The first thing that stands out is how similar AT&T and the other top wireless carriers are. Each has its personality, strategies, and staff. Despite this, we can notice that AT&T and T-Mobile are the two most similar in network reliability, availability, and speed.
AT&T’s customers typically say that they have great speeds, which means their “data services (including voice) are very reliable.” The user reviews from the Motley Fool network are more in favor of AT&T, but it’s clear that they all have a high level of quality.
From a wireless perspective, AT&T and T-Mobile both have a variety of plans to choose from. The user reviews are also similar for both companies. Overall, AT&T has a better network experience, with fewer dropped calls and less congested connections.
Conclusion
The “Bell System” formation in 1885 greatly enhanced the “American Bell Telephone Company” and set the stage for its operations. In 1900, the United States congress controlled the Bell System and created the United States telephone administration and the federal telephone exchange system.
AT&T inherited the Bell System, and over time, the company has transitioned from being the United States the only provider of fixed telephone service to being the nation’s leading provider of both mobile and wireline telecommunication services.
Frequently asked questions
Question 1.) What are the strengths of AT&T?
Answer: AT&T’s wireline business is known for making sure its customers stay on par with the technological changes of the market.
Question 2.) Who is better between AT&T and Verizon in wireless?
Answer: In wireless, Verizon has been the first mover, building out the infrastructure and taking an early position in the market.
Question 3.) How do we compare AT&T with others?
Answer: The first thing that stands out is how similar AT&T and the other top wireless carriers are.
Question 4.) When was AT&T founded?
Answer: It was founded on October 5, 1983.
