AT&T Gets Heat from Billionaire Activist

September 12, 2019 | Activist Updates, Hedge Funds

Hedge Fund Elliott Management writes to ATT on how to “realize a historic increase in value” for its shareholders

Paul Singer runs hedge fund Elliott Management. The firm revealed in its letter yesterday to telecom conglomerate AT&T that it owned $3.2 billion of the latter’s stock.

Elliott’s open letter claimed that AT&T could boost its share price to $60+ by 2021 through “readily achievable initiatives.”

“This represents 65%+ upside to today’s share price – a rare opportunity for any company, let alone one of the world’s largest,” Elliott wrote.

Exhaustive diligence

Hedge fund Elliott Management detailed its extensive due diligence on AT&T. This exercise included reviews through consulting firms on strategy, cost optimization, and network dynamics.

Elliott was struck by “the prolonged and substantial underperformance of AT&T as an investment relative to its potential.”

The hedge fund pointed out that AT&T had underperformed the S&P500 by 150 percentage points over the last decade.

What AT&T did wrong

According to Elliott, AT&T wrong-footed itself by its expensive acquisitions of DirecTV and Time Warner. Elliott claims the $67 billion DirecTV acquisition was consummated “at the absolute peak of the linear TV market.”

On AT&T’s $109 billion Time Warner transaction Elliott said it was “cautious” on the benefits of the combination.

According to Elliott, AT&T created a well-capitalized and viable competitor after its deal with T-Mobile failed. As a result, AT&T paid the largest break-up fee ever and provided T-Mobile with seven-year roaming and invaluable spectrum.

This M&A strategy has directly led to AT&T’s “profound” share price underperformance.

What AT&T needs to do

According to Elliott, AT&T needs to cut expenditure and sell off its DirecTV and Mexican wireless businesses. It should refrain from further M&A and should instead focus on 5G. The hedge fund has extensive experience of shaking up underperforming management. It has launched 149 campaigns at 139 companies, earning shareholders billions of dollars.

After the letter, AT&T stock closed about 1.5% higher on Monday.

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
FinTech: Lloyds To Acquire Stake In Loyalty App Bink
January 4, 2022     FinTech, News

Lloyds Banking Group (LON: LLOY), Britain’s biggest mortgage provider, will acquire a minority stake in loyalty app Bink, according to a report by Sky News for an undisclosed amount that…
Digital Assets: Coinbase CEO Armstrong Said To Have Splurged $133M On Home In LA
January 4, 2022     Digital Assets, News, Real Estate

An iconic property in Bel Air, Los Angeles, designed by internationally acclaimed English architect John Pawson changed hands last month for $133 million and the buyer was Coinbase (NASDAQ: COIN)…
Alternative Investments/ESG: VegTech Invest Launches Plant-Based Innovation & Climate ETF

VegTech Invest advisory has launched the VegTech Plant-based Innovation & Climate ETF (Ticker: EATV), its first financial product. The ETF offers exposure to publicly traded companies actively innovating with plants…超·世界.png
Venture Capital: Chinese AI Startup Parametrix Raises $100M, Turns Unicorn
January 4, 2022     Artificial Intelligence, News, Venture Capital

Chinese AI company has raised $100 million in a Series B round led by Sequoia China and joined by existing investors 5Y Capital and Gaorong Capital. Though the valuation…