WSJ : AT&T May Struggle With Trip Down Mexico Way

AT&T May Struggle With Trip Down Mexico Way

AT&T may have caught the travel bug. That could prove to be a strain.
After positioning itself to get a piece of the Latin American video market through its pending purchase of DirecTV, the telecom giant may be eyeing a swath of wireless assets América Móvil is looking to sell. The Mexican company is divesting these to avoid antitrust penalties being imposed by regulators due to its dominant market position.
Owning a Mexican carrier might hold appeal for AT&T, which could theoretically bundle wireless with video service supplied by DirecTV's Mexican joint venture with Grupo Televisa. But financing the trip down south might be another matter.
AT&T and other carriers are preparing to participate in two coming U.S. government auctions of wireless spectrum. These could generate as much as $50 billion in combined proceeds, with AT&T accounting for nearly one-third of that, according to MoffettNathanson.
That will have to be financed with debt. Indeed, Moody's is anticipating $10 billion to $15 billion for AT&T's spectrum purchases over the next 12 to 18 months. The ratings agency already has put AT&T's debt on review and has said a downgrade is likely if and when the DirecTV deal closes, which AT&T puts in the second quarter of 2015.
But to truly lower América Móvil's market share, AT&T would also likely need to use debt to pay for the Mexican assets, which could be worth as much as $17.5 billion, according to a report by Bloomberg News. Adding the Mexican assets to the picture could further pressure AT&T's credit rating, says Mark Stodden, a telecom analyst at Moody's.
AT&T's net debt stands at 1.8 times 2015 earnings before interest, taxes, depreciation and amortization. That will rise to two times after the DirecTV deal closes, according to UBS. The firm estimates AT&T could raise that to around 2.5 times—the level Verizon Communications reached to buy the rest of Verizon Wireless. This would give AT&T debt capacity of $27 billion for spectrum purchases and deal-making.
Making the math more difficult, AT&T's hefty dividend consumes roughly 90% of its free cash flow. That figure that will fall into the mid-80s after the DirecTV deal closes as the company benefits from some of the latter's cash flow. But the need to maintain and increase the dividend, which AT&T has raised every year for the past 30 years, places another constraint on AT&T's ability to support additional debt.
Granted, the América Móvil assets would also come with cash flow, helping AT&T offset some strain of any additional debt. But the company may also need the flexibility to spend more on spectrum, depending on how the auctions go.
For investors, an AT&T purchase of América Móvil's assets could be a source of southern discomfort.
Miriam Gottfried CONNECT

WSJ : Logitech Points a Remote Control at Your Smart Home

Logitech LOGN.EB 0.00% is making a bet that people will want to control not only their TVs, stereos, game consoles and set-top boxes with one remote, but also use it on their Internet-connected blinds, coffee makers, door locks, light bulbs, and thermostats, too. On Wednesday, Logitech introduced its Harmony Living Home line.

Using apps or remotes, users can send commands to multiple devices with the touch of a single button. For example, you can create a “Good Morning” combination that opens the blinds, starts up the coffee maker, and plays your favorite streaming service through your living room speakers. The Harmony system is compatible with smart home products from Nest, SmartThings, Honeywell HON +0.84%, Lutron, Schlage, Sylvania, Sonos, Philips and others.

Logitech’s new living room and smart home remotes will be offered in three different packages at three different price points.

At the entry level sits the Harmony Home Hub: a $100 RF, IR, Wi-Fi and Bluetooth receiver that can control living room and smart home devices. There’s no physical remote. Instead, you pair the Hub with a Logitech app that turns smartphones and tablets (both iOS and Android) into touch-screen remote controls.

The next step up is the $150 Harmony Home Control package, which pairs the Home Hub with a traditional universal remote—in all its rubbery, physical button glory. The remote itself has upwards of 40 buttons, many of them assignable.

And at the high-end is the $350 Harmony Ultimate Home setup, which includes the Home Hub and a remote control that mixes more than 20 buttons with a 2.4-inch, color touchscreen. Both the $150 and $350 package remotes use RF signals to connect to the Home Hub, allowing the little receiver to be hidden in cabinets rather than cluttering up a home entertainment system. The remotes can be used up to 30 feet away from the Home Hub.

The three different packages will hit retailers in the U.S. and Canada later this month. Those who already own a Logitech Harmony remote, but want to upgrade to a smart home set, can trade in their old remotes for $100 toward the $350 Harmony Ultimate Home combo at Best Buy BBY -1.49% stores.

Chad Thompson, a Logitech spokesman, said that more than 10 million Harmony controllers have been sold over the last decade and expanding into the smart home is a logical next step for the universal remote. “Our customers are very much early adopters,” Thompson said, adding that a recent survey of thousands of Harmony users found that 80% also currently own smart home products.

FT : Qatar Airways takes delivery of first A380 superjumbo from Airbus

Qatar Airways has taken delivery of its first A380 from Airbus, promising “class” not butlers for passengers travelling from London’s Heathrow airport to Doha when the superjumbo takes up the route next month.
In a pointed swipe at rivals battling over the luxury interiors on their A380 aircraft, Akbar Al Baker, Qatar’s chief executive, said: “We have no residences, no suites and no butlers, but we have class.”

The delivery of the first of 10 A380s ordered by Qatar Airways brings to an end a three-month dispute between the airline and Airbus over the quality of the cabin interiors. Mr Al Baker had previously rejected delivery of the aircraft after saying the cabin was not up to expectations.
However, on receiving the first A380 he was in a more emollient mood and even hinted more orders could be on the way. “We will see its performance and, if it exceeds our expectations, we will . . . maybe take some more,” he told journalists in Hamburg, Germany.
This was good news for Airbus because it has been struggling to find new buyers for the A380, which suffered major cost over-runs partly because of production problems. Fabrice Brégier, chief executive of Airbus’s passenger jet business, told Bloomberg that a production rate of close to 30 aircraft a year could be maintained even though he admitted orders had been soft in 2014.
Airbus has secured orders for 318 A380s with 19 customers, and some analysts believe the superjumbo – which carries more than 500 passengers – will struggle to generate sales to match smaller long-range aircraft.
Airbus is on track to deliver the first A350 – its new long-range jet that is smaller than the A380 – to Qatar Airways, the launch customer, before the end of the year.
Mr Al Baker hinted that Qatar Airways, which has ordered 80 A350s, could buy more. “The aircraft will – God willing – be delivered to us before the end of the year on schedule and we may have some additional surprises for you which I will not discuss with you now,” he said.

>>> Moody's comments on US sovereign rating; AAA ratings remain stable

Moody's comments on US sovereign rating; AAA ratings remain stable 
- Numerous credit strengths keep the US government's credit rating positioned at top-tiered Aaa, despite deterioration in its debt position since the financial crisis
- The most likely source of credit pressure, which is growth in the deficit from projected increases in social spending, is a long-term issue unlikely to pose a risk to the Aaa rating for several years. The outlook on the Aaa rating is stable.
- Supporting the Aaa rating are the very large and diverse economy, a strong record of GDP and productivity growth, and the status of the dollar and the Treasury bond as global reserve currencyassets, allowing the US government to carry a higher level of debt relative to other countries