NEW YORK (TheStreet) -- AT&T (T) - Get Report was sued by the FTC last night for what the agency describes as "data throttling" or slowing down customers web browsing experiences after they reached a ceiling on what was supposed to be unlimited data plans.

"If you make a promise about unlimited consumer service, we expect you to fulfill those promises," said FTC chairwoman Edith Ramirez.

The agency also alleged that the company charged termination fees on unhappy customers who wanted to leave their plans early, and the suit is reported to be seeking millions of dollars in damages.

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The FTC's investigation estimated that when the illegal data throttling began there were 14 million AT&T customers on the company's unlimited data plan, but that 3.5 million of those customers experienced data slowdowns a total of 25 million times.

AT&T called the allegations "baseless", according to the Los Angeles Times.

AT&T shares are flat in trading today.

TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • T's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.40 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, AT&T INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for AT&T INC is rather high; currently it is at 55.88%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.10% trails the industry average.
  • You can view the full analysis from the report here: T Ratings Report

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