AT&T (NYSE:T) is undergoing some structural changes, which have investors concerned about its future prospects. However, the company should emerge as a more streamlined and robust enterprise after its successful reorganization. It’s positioned incredibly well to benefit from the 5G boom, and its decision to focus on its core business has already started to pay dividends. Moreover, on a proforma basis, T stock trades at a highly attractive valuation.

Total returns for T stock in the past year have been at just 1.3%. Investors have been spooked by its reorganization plan, which is why the stock has failed to gather momentum. Nonetheless, it offers an excellent opportunity for investors to pick up the stock at a significant bargain.

Favorable Trends In Recent Earnings Results

AT&T’s second-quarter topped estimates and pointed to a few long-term trends which would positively impact the company’s top and bottom line. During the quarter, revenues rose by 6.1%, driven by a healthy 10.4% surge in the company’s mobility segment revenues. This was in turn because of a sizeable increase in postpaid smartphone subscriptions and postpaid data devices.

The company’s postpaid phone subscribers have shot up over 2.6 million in the past year. With the belligerent 5G deployment across the U.S., the company’s subscribers will continue to rise at a healthy pace in the coming years.

AT&T’s fiber business has also performed incredibly well, adding 1 million new customers in the past year. Its fiber penetration rate is at a substantial 36%, with over 5 million subscribers. However, its fiber business is growing at a diminishing rate due to the widespread use of 5G-enabled wireless devices.

Moreover, HBO and HBO Max’s domestic subscriber base has expanded to 47 million. The subscriber count is expected to rise to 70 to 73 million by the end of this year. This is likely to be a major catalyst in the company’s efforts to become a 5G juggernaut.

5G Efforts

AT&T had been the frontrunner in 5G internet speeds across the U.S. in a couple of years. However, after the merger with Sprint, T-Mobile (NASDAQ:TMUS) has made a colossal leap in network performance and has overtaken AT&T in the 5G race. AT&T’s median download speeds at the second quarter this year were 47.96Mbps, whereas T-Mobile speeds came in at 54.13Mbps.

AT&T’s 5G network is deployed via a low band spectrum. However, the company will be deploying a mid-band spectrum by the conclusion of this year, after acquiring a 29% share of licenses at the C band auction. These measures are likely to make it more competitive against T-Mobile.

The company expects its capital investments to hover at roughly $22 billion in 2021, geared towards 5G infrastructures. The increased investments in its 5G business will reap major rewards for the company as we advance, in the shape of higher margins and revenues.

Furthermore, the launch of the new iPhone 13 is likely to become a major growth catalyst for AT&T. The company will be offering the latest iPhone devices at a $0 price tag to qualifying customers again. It did incredibly well last time it offered attractive deals for the iPhone 12 and witnessed a sharp increase in postpaid subscriptions.

Bottomline On T Stock

AT&T has undergone several changes to its business in the past year. We are yet to see the results of its reorganization plan, but analysts are bullish over the company’s long-term potential.  It has plenty of room to grow its consumer broadband and enterprise services business with 5G as a backdrop. Moreover, despite its solid fundamentals and outlook, it trades at just 1.2 times forward sales. Hence, T stock is a highly attractive long-term prospect trading at a salivating price point.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines