In what looks to be a very noisy battle for the fall season, Elliott Management and its billionaire protagonist Paul Singer have set their sights on AT&T. The activist hedge fund disclosed a $3.2B position in AT&T, not a minor amount and a little over 1% of the telecommunications giant's marketcap. And along with that investment they sent a rather public letter.
That letter detailed a bunch of changes they intend to push for to help boost the company's stock price, which it sees as having underperformed for years. The list includes the sale of many of the things AT&T has spent a lot of time and effort buying: DirecTV, its Mexican wireless business, various landline assets, etc. They took the company's Time Warner acquisition to task, saying the strategic benefits have not materialized, as well as its failed bid for T-Mobile (was that 8 years ago now? holy smokes).
As much media attention as the letter has garnered, they're not going to get anywhere pulling on the tail of the Ma Bell dragon without some help. Hence the letter, which is surely aimed at drumming up support to put more pressure on AT&T to change its strategic directions. I have no idea where this will go, except to say that I am sympathetic as I have never really been on the bandwagon of combining content and infrastructure in the way AT&T and other industry giants have been trying to do.
But win or lose, Elliott Management's move seems to ensure that the argument over AT&T's direction seems likely to stay in the news for many months to come. Hedge funds are making waves in telecom and internet infrastructure this year to be sure (e.g. Aurelius over at Windstream).
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