Friendly fire

9 September 2019 By Jennifer Saba Follow @jennifersaba

The activist fund’s demands for the $270 bln U.S. telco are mild: Be leaner, stop doing deals, cut debt and improve governance. Missing, but worthy of discussion, is the idea of dethroning boss Randall Stephenson. The reticence may reflect that Elliott can’t fight this one alone.

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AT&T shareholder Elliott Management called for the U.S. telecom operator, which was worth $265 billion at the market close on Sept. 6, to sell assets, cut costs and revamp its governance in a letter published on Sept. 9.

The hedge fund run by Paul Singer laid out a series of “strategic setbacks” made by AT&T including its attempt to buy rival T-Mobile US in 2011, and its acquisition of Time Warner, which closed in 2018, leaving the company heavily indebted.

Elliott laid out a four-part plan including a review of AT&T’s assets that would explore potential divestitures, ending significant acquisitions, setting a new target of expanding its EBITDA margin by 3 percentage points, and improving leadership and oversight.

The plan referred to an earlier shareholder proposal to separate the roles of chief executive and chairman, currently held by Randall Stephenson, but did not call for specific changes to the company’s executive team.

AT&T said in a statement it looks forward to engaging with Elliott and it’s executing many of the actions outlined in the letter to the board.

AT&T shares were up around 4% in morning trade.

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