“Nomura launched coverage of the telecom universe Monday evening, slapping a ‘buy’ rating on AT&T over Verizon and Sprint-Nextel, citing what they called ‘overly pessimistic’ sentiment on the company, which has ‘significant cash generation, a healthy and meaningful dividend and the likelihood of a large share repurchase announcement in the near term,'” Matt Phillips reports for The Wall Street Journal.
“And while the expected announcement of a Verizon iPhone will likely mean Verizon will take share, the end of iPhone exclusivity AT&T might not be all bad for Ma Bell,” Phillips reports. “AT&T had to fork over fat subsidies as part of its exclusivity agreement with Jobs & Co. That’s been a weight on margins… One caveat however, is if AT&T and Verizon choose to engage in a price battle for share over iPhone users by boosting subsidies they pay for the phones, ‘which would impact the bull case of rapidly expanding margins in a lower gross-add environment.'”
Read more in the full article here.