AT&T recovery

Although AT&T's (NYSE:T) merger with TimeWarner in 2018 has been blamed for holding the telecoms giant back for years, the market has not exactly rewarded Mother Bell's decision to divest his WarnerMedia unit and merge it with Discovery (NASDAQ: DISCA).

According to data provided by S&P Global Market Intelligence AT&T shares will lose 14.5% of their value in 2021, very likely because in addition to getting rid of its media business, AT&T is also cutting its dividend in half.

It's worth noting that the new spin-off company will be a powerful media powerhouse in its own right. CEO John Stankey recently reported that HBO and HBO Max ended 2021 with 73.8 million subscribers, well ahead of what AT&T had planned for the year, and he expects 2022 to be even better.

However, once unbundling happens, AT&T will be able to focus its resources on expanding its 5G network, in which it is already investing hundreds of millions of dollars and will spend more in the future.

What happens next?

AT&T and Discovery have already received approval from European Union regulators for the spin-off and merger and are now awaiting a response from US antitrust authorities.

Wall Street already expects AT&T's payout to reach parity with its current dividend again by mid-decade and, as it now yields around 8% p.a., even a halved dividend would still be a profitable salve for investors.

AT&T is forecast to grow by 6.5% in 2022.