Financial Statement Analysis of At&t Inc.

AT&T INC.

AT&T is a telecommunications company headquartered in Dallas, TX which offers wireless and wired communication services businesses and consumers in the US, Mexico and Latin America.  AT&T's wireless solutions include mobile data services, and local and long distance voice services for consumers, small businesses and government.  The wireless segment also offers equipment and accessories such handsets and battery chargers. The wireline segment offers wired solutions such as U-verse TV and Internet access, VOIP services, secure network management to businesses, data and voice communication services.  AT&T has frequently used acquisitions to bolster growth and enter adjacent markets.  Its recent acquisitions include Spectrum, Leap, GSF Telecom, NII Holdings Inc. and DIRECTV.  Major competitors in the wireless segment include Verizon, Sprint and T-Mobile. 

STRATEGY

The telecommunications industry is characterized by fierce competition among the major players in a very saturated market. Firms mostly try to pry existing customers of competitors. Growing a customer base significantly means acquiring another competitor, be it small or big, to increase revenue. The threats of new entrants to the market is very low due capital intensive nature, building infrastructure, government regulations and the technology. The threats of substitutes are very high with competitors offering the same services with at price points. As a result, it is very easy to for customers to switch to different carriers with lower price offerings.

AT&T’s strategy to stay competitive is trying to bring all the services together to its customers by bundling and services and packages while providing superior service. To achieve this, it has invested in infrastructure and by acquiring companies such as DirecTV and Spectrum in recent years. To achieve this growth, the company has been financing this growth with debt. By acquiring DirecTV, for example, AT&T hopes to increase revenue by bundling services and packages to mostly the same customers. This also eliminates a competitor in one of its product’s(U-verse) market. It is also in the process of merging with Time Warner which will transform it into a technological, entertainment and telecommunications surging it far ahead of its competitors.

SHORT-TERM LIQUIDITY ANALYSIS

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Current Ratio:

Current ratio, which equals current assets divided by current liabilities, indicates amount of cash available and other current assets the company expects to turn to cash to repay its short-term obligations.  AT&T Inc.’s current ratio decreased from 0.90 to 0.75 which means the company may have difficulty meeting its current obligations although this may not be critical since AT&T has good long-term prospects and may be able to borrow against those prospects to meet current obligations.