Overall Conclusions and Recommendations Profitability From 2013-2015, ATT made several acquisitions and mergers, along with sales of their Connecticut Wireline and Advertising Solutions segments. Although these one-off transactions have helped them boost their revenues, they were also largely responsible for their increased expenses, thus causing the decline in GPM and fluctuations in NP and OP margins. As compared to Verizon, AT&T has reported higher revenues repeatedly, but has failed to bring down their costs. Thus, they have lagged behind Verizon in their profitability margins. However, with proper handling of their recent lucrative investments, and more focus on cost control, AT&T may be heading towards a more profitable future. Liquidity …show more content…
Not only are they behind the ideal benchmarks of 2.1 and 1.1 respectively, but also beaten by Verizon in these ratios. However, with the expected improvement in the company’s position in the near future, they may be able to turn this position around and be in a more stable position to settle their current liabilities. Solvency As discussed in this analysis, both AT&T and Verizon took up a lot of debt to fund their capital needs the past 3 years, thus affecting their solvency. The impact for AT&T was a rise in their debt-equity ratio and a deteriorating interest cover, whereas Verizon pushed their debt-equity ratio to a massive 671% by 2015, yet maintained an acceptable interest cover due to their healthy PBIT. Overall, AT&T’s solvency was still stable due to them staying close to industry benchmarks and utilizing interest swaps and locks as safeguards against rising interest rates. In order to improve their solvency, AT&T should properly consider their rising debt levels while making future financing decisions, and consider using free cash-flows for debt repayments instead of stock …show more content…
This, on top of their substantial stock repurchases goes to show that AT&T values their shareholders and is committed to providing impressive returns to them. However, AT&T might want to hold back on these stock repurchases, and use the resulting free cash flow to create long term wealth for their shareholders, in the form of a higher share price. SWOT Analysis AT&T’s impressive world ranking and market share show how well it has performed to get this far. With its recent acquisitions and mergers, the company is seen to be expanding their horizons, not just geographically like in Mexico, but also technology-wise with their DIRECTV and AWS-3 Spectrum acquisitions. Although facing cost and competitive drawbacks, AT&T can improve their position further by taking advantage from the various opportunities the modernizing-industry and their acquisitions provide, using their strengths to overtake their competition in