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AT&T Inc. (T) Is a Buy With or Without Time Warner Inc (TWX)

November 14, 2017 – by Richard Band

Just last week, AT&T Inc’s (NYSE:T) CFO said at a financial conference that its long-awaited merger with Time Warner Cable Inc (NYSE: TWX) wasn’t going to happen by the end of the year, as expected.

AT&T T stock

That news had more of an impact on TWC stock than it had on T stock but that simply may be that AT&T has been languishing for so long that bad news hardly makes a dent any longer.

On the surface, its most recent earnings report was hardly anything to get excited about. Cord-cutters are moving away from cable, so its investment in DirecTV isn’t faring well. It lost U.S. subscribers in the war over mobile users.

And now it seems the Department of Justice, which is looking into the implications of the $85 billion merger between T and TWC, is less of a sure thing as was anticipated.

Last year at this time, Donald Trump became President-elect Donald Trump and corporations were very excited that a new era of deregulation and lighter government oversight was on the way.

This feeling of relief, along with hopes for business-friendly tax reform and an infrastructure spending bill would raise all corporate boats. It’s the reason so many big mergers have been undertaken or at least explored. The recent unsolicited $106 billion bid for Qualcomm Inc (NASDAQ:QCOM) by Broadcom Corporation (NASDAQ:AVGO) is a case in point.

But this year’s elections went a bit differently than last year. And now forces in Washington may be realigning, which could forestall T’s ambitions.

However, all this less than good news is hardly the end of the story for T. If you’re a value investor or a contrarian investor, there’s still more to like about T stock than all the doom and gloom that has been pinned on T in the past year or so.

The reality is, T as well as its key U.S. competitor Verizon Communications Inc (NYSE:VZ), are not doing well this year and much of that is simply because they’re not big growth companies. And they’re not big manufacturers who have been languishing for years like Boeing Co (NYSE:BA) or Caterpillar Inc (NYSE:CAT).

They are solid, steady players that are great long-term total return stocks that dominate the telecom landscape in the U.S. and abroad. Nothing sexy.

Yes, in recent years T has been looking to expand its operations to build up content services to add value to its mobile business. And that quest is huge, given its size and needs.

But its hardly all resting on whether the TWC merger happens.

T is growing rapidly in Mexico as well as its other international markets. Its high-speed internet is also in great demand.

Bottom Line on AT&T Stock

And even all the talk of its subscriber losses is overblown. Yes, its losing customers, but it has significantly lowered those numbers quarter after quarter. That means it’s actually improving on subscriber drift.

You have a strong, blue-chip company that has a very safe 6% dividend at a 22% discount and far less downside than upside. That sounds like an opportunity to me.

Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.