Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Can the Industrial Internet Push AT&T to Big Growth?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Shareholders of both Verizon (NYSE: VZ  ) and Vodafone (NASDAQ: VOD  ) have finally approved what is now the third-largest deal in corporate history. The $130 billion takeover will net Vodafone shareholders around $84 billion, including stock. Verizon will get complete control over the 45% stake Vodafone once held in Verizon Wireless, allowing it to better compete with rival AT&T (NYSE: T  ) . 

A win for all?
Verizon's CEO Lowell McAdam thinks that the deal gives his company more financial flexibility in regards to investing in new technologies that are crucial for renewed wireless growth. He said that Verizon is "just getting started" in regards to wireless. Verizon is now much more threatening to AT&T, and has much more control over its own future.

Besides a whopping payout for shareholders, the deal also puts Vodafone in great financial shape, with Chairman Gerard Kleisterlee saying that it would be "the opening of an important new chapter in the history of Vodafone." When the deal was announced, many speculated that Vodafone would become a takeover candidate, and many thought AT&T was a prime suspect to do it. This possibility was recently ruled out, however. Vodafone is still on its own, operating with more cash and a stronger balance sheet. 

If you fail once, try again?
With AT&T starving for growth in the saturated domestic market, many thought expansion into Europe made a lot of sense. Vodafone would have also given it exposure to emerging markets, another lucrative source of long-term growth. While AT&T can still make another bid for Vodafone in the future, it might have some upcoming growth prospects here in the U.S., as well.

The Industrial Internet, for example, will connect everything from engines to refrigerators over the cloud, enabling things such as remote monitoring and big-data analytics. This will all be enabled by machine-to-machine communications, or M2M. General Electric (NYSE: GE  ) thinks that the Industrial Internet could account for $82 trillion in economic activity by 2025, or an estimated half of the estimated $164 trillion global economy That's big, and AT&T signed a big deal to capture a lot of that growth.

AT&T already has an estimated 15.2 million devices connected to its network. Its M2M-related customers increased by more than 38% last year. It makes perfect sense for GE to partner with the telecom. This will also likely translate to growth for AT&T, as millions of new GE devices roll out into the world, ready to be connected to its network. Bill Ruh, VP of GE Software, sounded excited about the deal:

Together, we see a future where the intersection of people, data, and brilliant machines will have an enormous impact on the productivity and efficiency of industries around the world. By connecting machines to the network and the cloud, we are taking an important step to enable workers all around the world to track, monitor, and operate our machinery wirelessly and remotely through highly secure and machine-to-machine communications.                                                                                             

It appears that AT&T might have another growth driver lined up, and it might not have to try again in Europe.

Connected cars will be a catalyst
Besides the Industrial Internet deal, AT&T also signed big deals with automakers such as Tesla and General Motors (NYSE: GM  ) . The deal with GM is especially significant, because AT&T smartphone subscribers will be allowed to add 4G-connected GM vehicles to their mobile data plans. This will begin in 2015, when GM's new models become connected.

The deal will be another outlet for growth in regards to AT&T, but will also be lucrative for GM as well. Each owner who activates AT&T's service will mean $20 for GM, as well as a percentage of the wireless fees. To boost its related infotainment ecosystem, GM will also be simultaneously launching its AppShop, which will allow drivers to download apps and share their location with friends in real time. AT&T's 4G LTE technology will also improve GM's OnStar technology -- making it 100 times faster. It appears that both companies stand to benefit from the partnership.

The bottom line
While not often noticed, AT&T is establishing itself in new growth markets. Deals signed with big-time companies like GE and General Motors are nothing to sneeze at. Maybe expanding outside the U.S. really won't be necessary after all.

Looking for a telecom with growth ahead?
Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2819756, ~/Articles/ArticleHandler.aspx, 9/5/2015 12:30:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Joseph Harry

I tend to focus more on value than growth, but stocks that tie in both are my favorites. I really like dividends, too. Follow me on Twitter @JosephHarry87 or stop by for more investing ideas.

Today's Market

updated 15 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:00 PM
GE $24.00 Down -0.51 -2.08%
General Electric C… CAPS Rating: ****
GM $28.88 Down -0.23 -0.79%
General Motors CAPS Rating: ***
T $32.56 Down -0.48 -1.45%
AT&T CAPS Rating: ****
VOD $33.89 Down -0.53 -1.54%
Vodafone CAPS Rating: ****
VZ $44.82 Down -0.90 -1.97%
Verizon Communicat… CAPS Rating: ****