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AT&T’s Valuation Metrics in the Global Telecommunication Market

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AT&T’s scale in the telecom space

On March 9, 2016. John J. Stephens, AT&T’s (T) chief financial officer and executive vice president, participated in the Deutsche Bank Media, Internet, & Telecom Conference. He discussed several aspects of the company and what we can expect for it in the years to come. Let’s take a look at the value proposition of the telecom player among select global telecommunication titans.

As of March 11, 2016, AT&T was the largest global telecom player by market capitalization. China Mobile (CHL) followed it in this metric. The third-largest global telecom player by market capitalization was Verizon (VZ).

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AT&T’s earnings multiples

Now let’s look at the earnings multiples for AT&T and select global telecom players. AT&T was trading at a current year PE (price-to-earnings) multiple of ~13.5x on March 11, 2016. This was higher than Verizon’s multiple of ~13.2x.

Deutsche Telekom (DTEGY), Telefonica (TEF), Orange (ORAN), and America Movil (AMX) had PE multiples of ~19.5x, ~15.4x, ~15.4x, and ~12.2x as of March 11, 2016.

Dividend yield of AT&T

Let’s look at the dividend yields for AT&T and select global telecom companies. The carrier’s forward dividend yield was ~5% as of March 11, 2016. This was higher than Verizon’s yield of ~4.3%. Telefonica, Orange, Deutsche Telekom, and America Movil had yields of ~7.4%, ~3.8%, ~3.8%, and ~2.1% as of March 11, 2016.

For diversified exposure to telecom companies in the United States, you may consider investing in the iShares Russell 1000 ETF (IWB). The ETF held a total of ~2.3% in some of the US telecom players at the end of December 2015.

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