Now that activist investors, notably Elliott, have successfully pushed AT&T to become a slimmer company, how does the rest of AT&T's business look on a go-forward basis? Are AT&T's shares worth holding on to? On the one hand Opting to spin off a stake in the new business, Warner Bros Discovery, to shareholders gave each investor the choice of whether to stay with the business or realize the tax consequences of selling. Luckily, the spinoff of the equity to AT&T shareholders was structured using the tax-free, Reverse Morris Trust method. Keep in mind, they sold this business after just few years earlier acquiring it for $85.4 billion. They sold the company to Discovery in exchange for $43 Billion in Cash, Debt, and Debt transfers to the new entity along with equity in the new combined business. WarnerMedia is AT&T's largest divestment to date. Management hopes that by selling off non-core operations, AT&T will excel at a new narrow focus, simply providing cell and land-line connections. Provide a fair value estimate share based on a discounted cash flow analysis and peer compsįollowing their ill-timed and overpriced acquisitions of DirecTV and WarnerMedia, AT&T is attempting to return to its roots.Why I believe an investment in AT&T is like an investment in a junk bond.How AT&T compares against its peers Verizon ( VZ) and T-Mobile ( TMUS).After the sale of WarnerMedia and DirecTV, the new AT&T is a slimmer company, but it's still a company that is plagued by a high debt load and a fundamentally low growth business model.Īfter years of declining share price and destroying shareholder value, can the leaner, meaner, AT&T finally turn the ship around? Data by YCharts Ronald Martinez/Getty Images News IntroductionĪT&T ( NYSE: T), the largest wireless carrier in the USA, recently closed on its divestiture of WarnerMedia to Warner Bros Discovery ( WBD).
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