AT&T Key Beneficiary Of Defense Dept’s $600M Award For 5G Testing

The US Department of Defense (DoD) has announced $600 million in awards for 5G experimentation and testing at five U.S. military test sites, representing the largest full-scale 5G tests for dual-use applications in the world.

Projects will include piloting 5G-enabled augmented/virtual reality for mission planning and training, testing 5G-enabled Smart Warehouses, and evaluating 5G technologies to enhance distributed command and control.

Each installation will partner military Services, industry leaders, and academic experts to advance 5G capabilities, the defense department said.

According to the statement, the DoD picked the test sites (in Utah, Washington, Georgia, California and Nevada) for their ability to provide streamlined access to spectrum bands and mature fiber and wireless infrastructure.

AT&T (T) was one of the key beneficiaries of the award, alongside other companies like Booz-Allen Hamilton, Nokia and Ericsson.

For instance, at the base in Washington AT&T will develop a system to allow use of 5G connectivity with present training devices.

Meanwhile in California, it will quickly deploy (within 9 months) a network based on commercially available equipment to support 4G and 5G utilizing cellular spectrum in both the sub-6 GHz and millimeter wave bands.

And finally, in Nevada, AT&T is tasked with providing an initially fixed then mobile 5G environment with high capacity and low latency to support the connectivity requirements of mobile combined air operations centers.

Shares in AT&T have plunged 27% year-to-date, and the stock scores a cautiously optimistic Moderate Buy Street consensus. That’s with 7 buy ratings, 3 hold ratings and 2 sell ratings. The average analyst price target of $32 indicates 18% upside potential lies ahead.

Most recently, KeyBanc analyst Brandon Nispel downgraded the stock to sell from hold citing signs of “deterioration” for AT&T’s DirecTV business in August- which has led to him believe that DirecTV’s subscriber losses will be worse-than-expected in the third quarter.

“More broadly, we see [AT&T] as secularly and competitively challenged where 2020/2021 expectations high across most segments,” he told investors, adding that he sees “few positive catalysts for [AT&T] outside of asset sales” while the 7% dividend yield “makes AT&T a value trap.” (See T stock analysis on TipRanks)