AT&T Inc. (NYSE:T) is in discussion with investor activist – Elliott Management to resolve the issues. After amassing a stake of 1% in AT&T, Elliott is waging a proxy war to increase the share value. The hedge fund is pressing for changes in the company’s business strategy and divesting loss-making units.
AT&T held a series of discussions with Elliott to resolve the issues in the past. According to people familiar with the matter, AT&T may be pressurized to sell some of the assets or spin-off into separate businesses. Elliott has criticized the management of AT&T for its entry into the media business. It said the units: Mexican wireless and DirecTV satellite division may not fit with the long-term business of AT&T and suggesting changes to the business to improve shareholder value. The deal between the telecom giant and hedge fund might conclude this month.
The CEO of AT&T said the company is also considering some changes suggested by Elliott but defended the media strategy: the acquisition of Time Warner Group and DirecTV. However, the subscriber base of DirecTV is declining. DirecTV could lose 1.1 million subscribers in Q3 2019.
Delays quarterly earnings
AT&T has delayed the publishing of quarterly earnings, which are scheduled for release next week, to give more time for the settlement. The company may announce quarterly results on October 28, 2019.
AT&T is trying to settle the issue before October 28, 2019, and avoid the public brawl. The company could seek help from its enlisted bankers at Goldman Sachs Group Inc., and Centre View Partners.
Elliott has prepared a list of directors to appoint on the board of AT&T. If the talks fail, Elliott may include some directors in the AT&T board to launch a proxy fight. Elliott could mount pressure on AT&T at an annual meeting in 2020. It has launched proxy wars at companies: Arconic Inc and Hess Corp in the past.
The market value of AT&T shares
The market value of AT&T shares is around $275 billion. Performance of AT&T is not impressive despite a series of potential acquisitions during the tenure of Chief Executive Officer – Randall Stephenson. AT&T stock currently trades at $38.47.