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Tablet PCs Could Lift AT&T Stock

As tablet PC usage rises, AT&T could see a sharp rise in revenues from wireless data customers.
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As tablet PC usage rises, U.S. telecom giant


(T) - Get AT&T Inc. Report

could see a sharp rise in its revenues from wireless data customers. AT&T competes mainly with


(VZ) - Get Verizon Communications Inc. Report


Sprint Nextel

(S) - Get SentinelOne, Inc. Class A Report

in the U.S. wireless market.

We see a potential upside of nearly 11 % to our $37.91 stock price estimate for AT&T if the company's average revenue per user (ARPU) of mobile data reaches $40 a month by the end of our forecast period, rather than the $28 a month that we currently forecast. Our analysis follows below.

Tablets everywhere

In a recent

interview with

Bloomberg News

, AT&T Mobility CEO Ralph de la Vega noted that AT&T is looking to capitalize on the tablet revolution that began with the launch of Apple's iPad earlier this year. "There⿿s going to be a huge number of tablets, different sizes, different functions,⿝ de la Vega said.


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plans to unveil a tablet for enterprise customers in early 2011.


(DELL) - Get Dell Technologies Inc Class C Report

has already released its Streak tablet.


(HPQ) - Get HP Inc. Report

, LG,



, Samsung and others have tablets in the works as well. It seems plausible that these devices will drive a surge in wireless data usage as networks get faster and devices grow more powerful.

Impact on AT&T

We currently estimate that AT&T's ARPU from data will grow from an estimated $14.50 per user per month in 2009 to just over $28 by the end of our forecast period.

However, the advent of tablet PCs running on speedy 4G networks should encourage users to consume more data on cellular networks like that of AT&T. In this scenario, we think AT&T's data ARPU could reach $40 by the end of our forecast period, yielding an 11% upside to our stock price estimate.

You can see

the complete $37.91 Trefis price estimate for AT&T's stock here.

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