AT&T Inc. (T) in collaboration with IBM Corporation (IBM) announced a new agreement to develop solutions that support "Internet of Things,” including analytic platforms, cloud and security technologies to help collect data from machines in different industry. We believe the new agreement will enable the company to scale up its business in the enterprise segment and enhance service offerings that garner significant market traction.
Both companies under their new alliance will target developing new solutions for city governments and midsize utility companies as well as help analyse data from assets such as mass transit vehicles, utility meters and video cameras. As a result, development of such products will help in urban planning and better management of equipment in utilities to bring down costs.
This is not AT&T’s first deal with IBM. The duo had entered into an agreement in Jun 2013 to develop a new eCommerce solution that provides an online shopping services platform via mobile application or in-store.
Acquisitions and strategic collaborations play a major role in shaping AT&T’s growth story. In terms of service offerings, the company enhanced its U-verse services by tying up with The Walt Disney Co. (DIS) to deliver three of its products – WATCH Disney Channel, WATCH Disney XD and WATCH Disney Junior. Further, AT&T expanded its business collaboration with Microsoft Corp. (MSFT) by incorporating Microsoft Lync to its Unified Communications portfolio of services.
In 2013, AT&T proposed to take over the largest prepaid wireless operator in the U.S. – Leap Wireless International – for $1.2 billion. This acquisition will also give AT&T control over Leap’s spectrum in the PCS and AWS bands covering 137 million people, thereby enhancing the spectrum base of the former.
Further, the deal will endow AT&T with a stronger pre-paid business line with the incorporation of the Cricket brand. In addition, AT&T will also benefit from more customer care service facilities, low-cost data plans and robust financial resources. The deal expected to close by the first quarter of 2014.
This year the company has already collaborated with automakers like Tesla (TSLA) and Audi for providing high speed wireless connectivity. It also entered into an agreement with Vantiv, Inc. (VNTV) to offer new mobile payment products to businesses. The company is also developing new cloud-based products such as NetBond in partnership with Equinix, Inc. (EQIX), to protect information by extending virtual private networks into the cloud.
AT&T currently retains a Zacks Rank #3 (Hold).
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