AT&T Inc. (T) completed the divestiture of its domestic Japanese outsourcing services operations for ¥9.2 billion (US$109 million using exchange rate on August 31) to Internet Initiative Japan Inc. (IIJI), according to plans announced in June 2010. The transaction involved the transfer of 1,600 domestic Japanese business customers and 245 employees.
 
The sale excludes AT&T’s infrastructure in Japan, inclusive of four global network service nodes, remote access infrastructure for corporate clients, an Internet Data Centre and significant international subsea cable capacity.
 
The company will continue to serve its Japanese customers with its existing operations in Japan. AT&T’s offers include managed global connectivity, hosting, mobile enterprise applications, cloud computing, application management, security, telepresence and unified communications.
 
The divestiture will enable AT&T to serve its multinational customers better. The company also exercised a call option on NTT’s 15 percent stake in AT&T Japan.
 
AT&T Inc. is the second largest provider of wireless services in North America and one of the world’s leading communications service carriers. Through its subsidiaries and affiliates, AT&T offers a wide range of communication and business solutions comprising wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale, directory advertising and publishing services.
 
The company reported fairly encouraging second-quarter results with earnings per share of $0.61, surpassing the Zacks Consensus Estimate of $0.57, a 13% year-over-year improvement. Revenue inched up 0.6% year over year to $30.8 billion, approximately in line with the Zacks Consensus Estimate.
 
For FY10, management expects to deliver strong earnings growth with high operating margins and free cash flow above the 2008 level, attributable to improved revenue trends and solid execution.
 
We currently maintain a Neutral long-term recommendation on the stock.
 
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