AT&T Inc. (NYSE:T) has opted to avert competition in content delivery network services by inking a partnership deal with Akamai Technologies, Inc. (NASDAQ:AKAM), a titan in content delivery network (CDN) services. Unlike the Internet, which is synonymous with congestion, CDN services deliver content faster by steering away from congestion; a factor that has made demand for these services to go through the roof. At the wake of the partnership agreement, demand for Akamai Technologies, Inc. (NASDAQ:AKAM)'s stock increased, sending the share price up 10 percent.
Under the terms of the agreement, AT&T Inc. (NYSE:T) will have to transfer its existing CDN operations, customers, and services to Akamai’s platform in the coming year. Akamai Technologies, Inc. (NASDAQ:AKAM) will then deploy CDN servers at the edge of AT&T’s IP network and in its varied facilities throughout the U.S. market. In addition, both companies have signed off to dedicating shared resources like customer care, technical support, professional services support, and marketing. “The alliance with Akamai positions us perfectly to deliver premier content delivery solutions to our business customers,” said Andy Geisse, the chief executive at AT&T Business solutions. Geisse also made a lot of references to the explosive growth in demand for content, underscoring the fact that CDN services facilitate fast and efficient delivery of bulk content.
AT&T Inc. (NYSE:T) and Akamai Technologies, Inc. (NASDAQ:AKAM) maintain that their focus will exclusively center on North America during the first 12 months of their alliance, after which they will expand globally.
This new alliance will perhaps brighten the outlook on AT&T, following reports that it was rated the worst carrier by US consumers toward the end of November. Despite the lackluster rating, AT&T still holds the crown for the best 4G LTE service and could use this new CDN deal to build on its strengths.
In early morning trading, Akamai Technologies, Inc. (NASDAQ:AKAM) shares leaped $3.56 to trade at $39.06, representing a 10 percent increase. AT&T’s shares, on the other hand, remained in a somewhat moribund state, dipping 11 cents, to trade at $33.80 in early morning trading at the NYSE.