AT&T Fights Back
AT&T shares surged as the company defended itself in court against concerns regarding lead cables. The wireless carrier clarified that these cables make up a small fraction of its network and disputed reports suggesting significant risks.
AT&T's shares surged following the resolution of lead cable concerns in court. The California Sportfishing Protection Alliance's lawsuit prompted AT&T to clarify that lead-wrapped cables make up less than 10% of their vast copper network, spanning approximately two million sheath miles. The majority of these cables remain actively operational.
AT&T expressed its stance that despite a previously-negotiated settlement requiring the removal of cables from Lake Tahoe, the cables should remain in place for further analysis by independent parties, including the U.S. Environmental Protection Agency (EPA). The company advocated for objective scientific evidence to determine the safety of these cables, challenging sensationalized media coverage surrounding the issue.
AT&T responded to the Wall Street Journal's test results suggesting land and water contamination in the US caused by cables. They accused the Journal of biased funding and purposely selecting sites with high lead levels to influence the outcome. AT&T aimed to undermine the Journal's findings.
AT&T shares had experienced a significant decline earlier in the week, prompted by the initial reports from the Wall Street Journal. However, the shares rebounded, surging 4.6% in pre-market trading, indicating an opening bell price of $14.05 per share on Wednesday.
AT&T's rating and price target were downgraded by a JPMorgan analyst due to competition, wireline weaknesses, and potential legal liabilities from copper cable reporting. Concerns include AT&T's LEC business and ownership of the original AT&T long haul network. Evaluating financial ramifications of the copper lead sheathing situation is challenging, making liability quantification difficult.
AT&T is scheduled to release its second-quarter earnings before the market opens on July 26. Early estimates indicate an adjusted bottom line of 60 cents per share on revenues of $30 billion.