Activist shareholder Elliott Management, which has pressed for big changes at companies including Barnes & Noble and Interpublic Group, said Monday it had taken a stake valued at $3.2 billion in the shares of telecommunication giant AT&T, and urged the company to focus more intently on its operations after a series of big acquisitions and missed opportunties have, in Elliott’s words, “eroded AT&T’s business focus and shareholder value.”
AT&T is grappling with subscriber losses at satellite-distributor DirecTV, which it acquired for $49 billion in 2016 and working to reduce debt after buying the former Time Warner for $85 billion last year.
“What has attracted our attention, as well as the attention of other shareholders – from large institutions to individual AT&T employees – has been the prolonged and substantial underperformance of AT&T as an investment relative to its potential,” Elliott wrote in a letter sent to AT&T Monday. “Over the past ten years, for example, AT&T – a “bellwether” in all senses of the word – has not only failed to keep pace with the broader market, but has actually underperformed by over 150 percentage points.”
The shareholder suggested that AT&T’s move into what it believes are non-core markets – DirecTV and WarnerMedia among them – “has not only contributed directly to its profound share price underperformance, but has also caused distractions that have contributed to the Company’s recent operational underperformance.” Elliott said it takes issue with the exodus of members of the management teams that ran both DirecTV and WarnerMedia and urged AT&T to focus more intently on its core telecommunications business and broaden its leadership team while potentially adding new members to its board of directors and divesting non-core assets.
More to come….