Telecom Stocks Rise as Investors Size Up Impact of Lead Cables
July 19 2023 - 8:59AM
Dow Jones News
By Will Feuer
Shares of AT&T, Verizon Communications and other
telecommunications companies were higher early Wednesday as
executives and investors sought to get their arms around the matter
of lead-covered cables.
Shares of AT&T rose 5.6% to $14.20 in premarket trading,
while Verizon stock rose 3.8% to $33.50. Shares of Frontier
Communications climbed 9.8%, Telephone and Data Systems stock rose
3.7% and Lumen Technologies shares were up 4.3%.
The rebounds come after a days-long selloff pushed shares of
AT&T, Verizon and others to multiyear lows. The selloff was
sparked by a Wall Street Journal investigation revealing that U.S.
phone companies have left behind a network of cables covered in
toxic lead.
AT&T Chief Executive John Stankey said in a memo to
employees Tuesday that the company expects an extended public
discussion about how to manage lead-clad cables. He also estimated
that "these cables represent less than 10% of our copper footprint
of roughly 2 million sheathed miles."
That followed a release earlier this week by TDS, which said it
had located about 10 miles of lead-covered cables across its
network.
Some Wall Street analysts said the industry may not get dealt as
large a blow as they initially had anticipated. Analysts at
Oppenheimer, who earlier ballparked the financial fallout from the
lead-cable issue at $5 billion to $50 billion, took their estimate
down to $2 billion to $20 billion.
Analysts at Raymond James said it is sounding like the industry
will deal with the lead-cable issue over many years and it is
unlikely it will disrupt current capital spending plans tied to 5G
and fiber-optic network expansions.
TD Cowen analysts, citing an "impromptu investor call" held by
AT&T Tuesday evening and the analysts' own assumptions, said
the financial risk for the company could be about $246 million a
year, "if any risk at all."
Write to Will Feuer at Will.Feuer@wsj.com
(END) Dow Jones Newswires
July 19, 2023 08:44 ET (12:44 GMT)
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