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AT&T’s Broadband Coverage and the DIRECTV Acquisition

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DIRECTV’s arrival

DIRECTV’s (DTV) merger with AT&T (T) suggests a significant impact on the telecom company’s broadband service. The DIRECTV acquisition, of course, went through the typical regulatory scrutiny before being approved by the FCC (Federal Communications Commission). During the process, AT&T agreed to certain conditions, which included broadband deployment. According to its recent press release, “AT&T continues to expect to boost broadband speeds and now plans to expand its high-speed internet service to reach more than 60 million customer locations by the end of 2018.”

According to AT&T, GigaPower, the company’s completely fiber-based service capable of offering 1 Gbps (gigabyte per second) internet speeds, is expected to have a coverage spanning greater than 14 million customer locations, including both consumers and businesses.

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Positive U-verse impacts

Earlier in this series, we discussed U-verse, AT&T’s fiber-based internet, TV, and voice service, which is similar to Verizon Communication’s (VZ) FiOS and comparable to the telecom services offered by cable companies like Comcast Corporation (CMCSA) and Time Warner Cable (TWC). According to the AT&T, U-verse spans around 57 million customer locations. In certain areas where the company offers both high-speed internet and TV, the service has about half the market share.

You may take exposure on AT&T while diversifying risk by investing in the iShares MSCI USA Minimum Volatility ETF (USMV) or in the iShares Core S&P 500 ETF (IVV). USMV held ~1.7% in AT&T as of July 31, 2015. AT&T made up ~1.1% of IVV’s holdings on the same date.

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