Introduction
AT&T Inc., is a service provider for the telecommunications, media, and technology industries. It provides wireless communications, data/broadband and internet services, local and long-distance telephone services, telecommunications equipment, managed networking, and wholesale services (Brue, 2021). Furthermore, the Company also creates and distributes film, television, and video game content and releases content in digital and physical formats. Home-based consumers can also access its advertising and entertainment offerings. In addition, it serves both individual customers and commercial enterprises. Additionally, it advertises its products and services under many names, including AT&T, Cricket, SKY, AT&T television (TV), AT&T PREPAID, AT&T Fiber, and Unefon (Sagers, 2019). The Company’s operations are in Asia, North America, Europe, the Middle East and Africa, Latin America, and the Caribbean. Due to the nature and structure of the Company, its major strategic objectives are high dividend payouts, mixing of entertainment and communication business in future providing the best content via mobility, video, and broadband, as well as reducing the net-debt-to-adjusted EBITDA ratio.
High Dividend Payouts
One of most important long-term goals AT&T has set to increase the amount of money it pays out in dividends to its stockholders. The Company now has a high dividend yield of 7.4%, which implies that it is anticipated that the Company will transfer 7.4% of its stock value to shareholders every year (Drury, 2022). This statistic is susceptible to significant shifts because it is calculated by dividing the annual dividend by the stock price.
If the dividend remains the same and the stock price remains the same, the yield will increase, and the inverse is also correct. A dividend may be kept even if the stock price drops dramatically if management is concerned about frightening away investors. This was the case with AT&T earlier this year when the stock price was $24, and the dividend distribution was $2.08, for a yield of nearly 9% (Drury, 2022). Any dividend yield above 5% is usually a warning sign for investors, as it is likely unsustainable or indicates investors worry about the underlying firm.
Mixing of Entertainment and Communication Business
The AT&T Company is known for providing its many consumer segments with various forms of entertainment and communication. It offers a comprehensive, hassle-free, and outstandingly entertaining entertainment experience that can be accessed on virtually any screen anytime (Team, 2019). On the other hand, the provision of telecommunications services constitutes the Company’s communication-related business activities. Its telecommunications services include data transmission across various media, such as wire, radio, optical, and other electromagnetic channels.
Combining businesses in the entertainment and communication industries is another company’s primary purpose. The combination of these two markets helps to ensure that the Company’s customers will always have access to the most up-to-date versions of its entertainment products (Team, 2019). In addition, the blending has made it possible for the corporation to maintain its relevance among its rivals, such as Verizon, Vodafone, and T-Mobile. Furthermore, mixing has assisted the Company in penetrating a diverse range of markets, contributing to a growth in the annual turnover rate.
Best Content via Mobility, Video, and Broadband
Since best content delivery is among the major strategic objectives of AT&T, the Company has unlimited data plans, internet, and mobility. AT&T Mobility, a provider of wireless services in the United States, is owned by the firm. There are 101.6 million mobility customers, making it the third-largest wireless carrier in the United States (Johnston, 2022). Furthermore, with download rates of up to 5,000 Mbps, AT&T Fiber is the greatest internet service the Company has to offer (Team, 2019). The newest 4K movie can be downloaded in a matter of seconds, and phone images can be uploaded to the cloud in minutes, all due to the lightning-fast speeds of fiber internet. Due to this, the AT&T internet package is the one most residents chosen. Generally, the unlimited data plans, internet, and mobility ensure that the Company supplies the best content to its customers in broadband.
Reduction of Net-Debt-to-Adjusted-EBITDA Ratio
The ratio of a company’s net debt to its earnings before interest, taxes, depreciation, and amortization (EBITDA) is very important since it measures how well a business can pay off its debt. It is preferable to have a debt-to-EBITDA ratio that is decreasing rather than increasing because this indicates that the Company is either paying down its debt or expanding its earnings (Kliestik et al., 2022). Similarly, if a corporation’s debt-to-EBITDA ratio is growing, it suggests that the Company is accruing more debt than it is earning. Although AT&T’s debt-to-EBITDA ratio is valued as fair, the management has a strategic objective of reducing it to reach an adjusted EBITDA range of 2.5x (Yildiz, 2022). This reduction will show that the Company can pay off its debt without bankruptcy.
Conclusion
In general, the most important strategic goals of AT&T are geared toward enhancing the Company’s overall state of financial health. In addition, they are concentrating on ensuring that the organization has a competitive advantage. The Company is positioned to be innovative due to the significant strategic objectives it has set for itself. As a result, it can integrate its business areas and develop premium products to increase its profitability.
References
Brue, K. (2021). Organizational change: Where have all the leaders gone when creating anti-harassment cultures? Administrative Issues Journal Education, Practice, and Research, 11(1). Web.
Drury, K. (2022). Can Investors Trust AT&T’s juicy 7% dividend? The Motley Fool. Web.
Kliestik, T., Novak Sedlackova, A., Bugaj, M., & Novak, A. (2022). Stability of profits and earnings management in the transport sector of Visegrad countries. Oeconomia Copernicana, 13(2), 475–509. Web.
Sagers, C. (2019). The worst opinion in Living memory: At&t/time warner and America’s Broken Merger Law. SSRN Electronic Journal. Web.
Team, T. (2019). How does AT&T make money? Forbes. Web.
Yildiz, M. (2022). AT&T: Optimum Capital Structure requires significant debt reduction (NYSE:T). Seeking Alpha. Web.