trending Market Intelligence /marketintelligence/en/news-insights/trending/3UkKZEsdrzUYqM3bewB_cA2 content esgSubNav
In This List

Union urges AT&T to nix activist investor's plan, citing harm to 5G investment

Blog

Broadcast deal market recap 2021

Blog

Volume of Investment Research Reports on Inflation Increased in Q4 2021

Blog

Price wars in India: Disney+ Hotstar vs. Amazon Prime Video vs. Netflix

Blog

Using ESG Analysis to Support a Sustainable Future


Union urges AT&T to nix activist investor's plan, citing harm to 5G investment

The Communications Workers of America want AT&T Inc. to reject a hedge fund's call for strategic changes, as the union believes it would hinder the company's 5G push.

CWA President Christopher Shelton recently urged AT&T Chairman and CEO Randall Stephenson and the company's board of directors to reject Elliott Management Corp.'s "Activate AT&T Plan." The four-part proposal recommends increased strategic focus, improved operational efficiency, a formal capital allocation framework, and enhanced leadership and oversight.

For his part, Shelton called Elliott Management's plan an "archetype ploy of vulture capitalists," noting that it would eliminate jobs and hurt long-term investors.

Shelton said Elliott's proposed combination of operational cutbacks and increased cash payouts to shareholders counters the hedge fund's "own recognition that AT&T is best-positioned to be the market leader in 5G." He said success is contingent on meaningful investment in the technology and improved execution. 5G is set to offer download speeds many times faster than the current 4G LTE wireless networks.

He also called Elliott Management's push for AT&T to divest the nation's leading satellite TV provider DIRECTV "misguided." The deal has enabled AT&T to provide access to licensed content, including live sports, that it otherwise could not offer and also has reduced "the cost of program acquisition, while also enabling the bundling of video, internet and wireless services nationwide," Shelton said.

He also noted it would be difficult to identify a buyer for DIRECTV that would not "face significant anti-trust scrutiny."

AT&T COO John Stankey in a recent interview with The Wall Street Journal said the company is not for sale, although it had been part of an overall portfolio review. DIRECTV would be a critical component as its Warner Media LLC unit launches HBO Max, an upcoming streaming service that will feature content from HBO, TNT (US) and TBS (US), as well as Warner Bros. Entertainment Inc.'s extensive film and TV library, Stankey said.

AT&T is looking for traditional pay TV distributors to play a role in gaining subscription traction for the service. More details about the service, which is slated to bow next spring, will be unveiled at an Oct. 29 investor day.

Speculation had swirled that AT&T was looking to sell DIRECTV in the wake of Elliott Management's proposal and that there could be a combination with the second-largest satellite TV operator DISH Network Corp. The notion of such a union was deemed unlikely due to regulatory concerns.

In its proposal, Elliott Management had not only pointed to the acquisitions of DIRECTV and the WarnerMedia assets but also to AT&T's failed attempt to purchase wireless provider T-Mobile US Inc. as strategic setbacks that have been particularly damaging to the telco's value over the last decade.

However, Stephenson at an industry conference last month defended AT&T's vertical integration strategy, noting that content consumption is going to continue to rise, warranting increased bandwidth and connectivity. Calling those beliefs "unassailable" and "kind of basic," he said those who agree on those premises are "going to like the assets that we put together."

During the presentation, Stephenson said Elliott Management's plan is a "mixed bag." He noted that some things make sense, and the company needs to push further and discuss them. Still, other areas are less clear on how they would benefit the telco.

"But these are smart guys ... and they put a lot of ideas into the paper that we need to sit down and engage with them on," Stephenson said.