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AT&T Inc. (T)

NYSE - NYSE Delayed Price. Currency in USD
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27.02-0.26 (-0.95%)
At close: 04:03PM EST
26.90 -0.12 (-0.44%)
After hours: 06:06PM EST
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  • T
    Ted
    Tigress financial lifts AT&T’s price target to $41 from $36 citing subscriber growth resilient business model by rating kept. Just came out about 15 minutes ago
  • D
    Dave
    Like I posted at the beginning of the trading day - this is TIMBER Thursday. You are welcome.
  • r
    ralph
    WASHINGTON, Jan 19 (Reuters) - U.S. airlines said on Wednesday the rollout of new 5G services was having only a minor impact on air travel as the U.S. Federal Aviation Administration (FAA) said it has issued new approvals to allow more low-visibility landings.

    The increased approvals for Boeing and Airbus planes meant an estimated 62% of U.S. commercial planes could perform bad-weather landings at some airports, up from 45% previously, the FAA said.
  • J
    JackRuby
    Unfortunately for all of us, FR's calculations are not correct.  His primary error is that he assumes that Discovery has 3.8B shares.  Discovery only has 505 million shares (.505B).  Per the SEC filing that he references, Discovery has 3.8B "authorized shares".  In reality, they only have 505 million "effective shares".  The market is currently valuing these shares at $31.18, which gives Discovery a $15.74B market cap.  If they had 3.8B shares they would have a market cap of $118.48B, which would be ridiculously high.

    In a traditional spin off, this is what would take place:

    Assuming Discovery shareholders receive a 1:1 ratio of WBD shares, that would mean that WBD will have 1.741B shares (.505 / .29 = 1.741).

    Of these 1.741B shares, 1.236B shares (71%) would belong to T shareholders (1.741 * .71 = 1.236).  

    T currently has 7.41B shares.  Therefore, each share of T would receive about .1668 shares of WBD (1.236 / 1.741 = .1668).  

    For every 100 shares of T you own, you would receive about 16.68 shares of WBD.  In reality, you would receive 16 shares and the cash value of .68 shares.

    Discovery's current market cap is $15.74B.  If the market is pricing this correctly, and Discovery is 29% of WBD, WBD would have a total market cap of $54.27B (15.74 / .29 = 54.27).

    This would imply that Time Warner's contribution to WBD's market cap is $38.53B (54.27-15.74 = 38.53).  It would be easy to argue that Time Warner's market cap should be much higher than $38.53B.

    T currently has a market cap of $194B, or $27.18 per share.  If the Time Warner assets are being valued by the market at $38.53B, that is $5.199 per share (38.53 / 7.41 = 5.199).

    This would mean that the market cap of T would drop by $38.53B and the price of T would drop by $5.199 per share.  T shareholders would receive .1668 shares of WBD for every share of T to make up for the difference.  

    To keep it simple, let's assume I own 100 shares of T.  Today, my shares are worth $2,718.  If a perfect spin off occurred immediately, the value of my account would not be changed.  The spin off creates a different way of accounting for the value of my assets, but does not create or destroy value (until the market values the assets differently).

    I would receive 16.68 shares of WBD (currently $31.18 per share), with a value of $520.08 (16.68*31.18 = 520.08).  

    My T shares would lose $5.199 in value per share.  T closed at $27.18, so it would open at $21.981 (27.18 - 5.199 = 21.981).

    My account would have 100 shares of T at $21.981 ($2,198) and 16.68 shares of WBD at $31.18 ($520.08).  The total value in my account would be $2,718, exactly what it was before the spin off.  

    At this point, the market would take over and value each company independently.  My opinion is that both T and WBD would be very undervalued and would appreciate immediately.

    These numbers are correct and logical.  Drink a coffee and study them until you understand them.  I am not a physicist, but I understand the concepts correctly and the math is very simple.     

    Disclaimer:  this is a simple analysis of how a perfect spin off would take place.  A lot could change between today and the day the deal becomes effective.  There could be stipulations in the deal that alter some of the variables.  Unfortunately, management hasn't provided investors with many details.  However, upper management of T has been accumulating shares, so it is in their best interest to make sure that the deal turns out well for the rest of us.
    Bullish
  • G
    Giantsfan
    Re: 5G interference with altimeters. I can't understand how testing can be that difficult. Interesting, local news reporter interviewing "airline expert". Said FAA and FCC don't talk to each other, and have no power over the other (duh!). Expert said there has never been any proof that cell phones cause interference with airplane cockpit. Yet, we turn off cell phones during take off and landing because FAA says so.
  • R
    Redvette
    Yeah airlines CEO's use Verizon and AT&T as their scape goats, They'll conveniently blame the 2 companies for any it's 2 companies for any delays that they incur no matter what the problem is. AT&T and Verizon purchased this 5G spectrum from the federal government with the government's full knowledge and blessings of the spectrums reach, band and airline instrumentation overlap, giving T & VZ 100% green light to purchase this spectrum and build-out their associated multi-billion 5G networks accordingly. VZ & T Senior Leadership and their shareholders are justifiably furious about this sham getting to this point.
  • M
    Mantra Man
    $100 oil coming up by memorial day and the summer driving season. China has a Supply chain problem and prices will continue to go up.

    Expect a 6% COLA increase for the OLD folks.
  • g
    gary
    Barrons article today - T leaning towards a Split Off of Discovery stock. As a long time holder of T I see no advantage of a split off to me. Choice exchange my T stock for new Discovery (no dividend yet?); keep what remains of T with a lower dividend but a “hope” that with a approximate 20% less T shares outstanding price will be higher. Will T really be 20% higher without Warner Bros.? With a spin off T dividend will be even lower but I will not have to decide what to do. I prefer to do nothing and have the two stocks. What kind of confusion is this going to cause the “widows and orphans” holding T?
    Neutral
  • R
    Rick
    ‘And Just Like That’ we find ourselves at $27+ heading to much higher levels. Here are several reasons off the top on why we go higher from here. I’m sure you have many more.
    1. DOJ approval of WBD will come shortly eliminating the dead money narrative. Progress made with unconditional EU approval and positive IRS Letter Ruling on reverse merger. John Malone will secure Discovery shareholder vote.
    2. Tax Loss selling complete. Former ‘high-yield’ dividend investors gone.
    3. Positive earnings surprises in each of the last four quarters. Conservative CEO said to expect more of the same.
    4. Wireless net add growth best in a decade, leading industry, highest ARPU. Fiber strategy on track.
    5. HBO Max is ‘content ready’, launched internationally, and exceeding subscriber growth targets.
    6. New 5G revenue streams coming with success stories and applications.
    7. $65bn in Broadband Infrastructure available under the Infrastructure Investment and Jobs Act with availability under other parts of the Act too. T has joined the FCC Affordable Connectivity Program which provides for $14bn of the total.
    8. Only halfway through cost efficiency projects that are on track and whose benefits will flow to the bottom line.
    9. T has pricing power to combat inflation as mentioned by the CFO and seen by Netflix.
    10. Two 5G auctions of FY21 completed – strong coverage map and no more auction uncertainty. FAA, FCC and Airline industry fully engaged in resolving 5G frequency issue around airports.
    11. $43bn in debt repayments by T under WBD deal will put standalone T at its targeted debt structure. No more chatter on debt concerns.
    12. Projected Free Cash Flow for Standalone T of $20bn in 2022. $11bn+ after capex and dividends will be available for ‘aggressive’ 5G investment and stock buybacks. T regains control of stock and eliminates ‘short’ attacks with FCF and new dividend policy.
    13. New dividend targeted to high end of market.
    14. Relatively new CEO gaining credibility. Laser focused on disciplined Telcom strategy.
    15. WBD recognized as one of the Top Three Global Streaming companies. WBD will be led by proven industry leader David Zaslav as CEO. Media attention and new strategies to come.
    16. Discovery on fire with a new $45 price target, up almost 50% since December low and up 6%+ on Friday.
    17. Potential sale of DirecTV adding to liquidity.
    18. Analysts jumping back in with new price targets (some happening now, more to follow).
    19. PE Ratio and other metrics for the last twelve months will ‘screen with brokers’ much better with release of full year earnings in less than two weeks. PE ratio will show 9x earnings, vs. 23x for the S&P.
    20. The short strategy (consisting of several items above) has played out.
    See you at much higher levels!
  • r
    rightsaidfred
    Anyone know why chiapet posts the price of oil every day on the T message board? It's like going to #$%$ Sporting Goods and chatting people up in the aisles about the price of milk.
  • r
    ralph
    here is part of a update I just came across.
    On Wednesday, AT&T and Verizon began activating that first tranche of C-Band spectrum around the country on newly installed antennas, choosing not to use it in a few areas close to airports, where interference could be an issue. 5G networks use higher frequencies than earlier generations, which help enable the faster connection speeds, lower latency, and greater capacity the technology promises. C-Band spectrum counts as mid-band, offering a balanced trade-off between geographic coverage and speed.

    Low-band frequencies are good for blanketing large areas because they can travel much farther from an antenna than high-band frequencies, but just aren't as quick. High-band spectrum can be used in a lightning-fast 5G network, but coverage can vary from city block to city block and be interrupted by buildings and other obstacles. An ideal 5G network has several categories of spectrum all working in concert together.

    AT&T's 5G network so far has been built largely on low-band spectrum to provide wide geographic coverage reaching more than 255 million people across the country. In densely populated areas -- 44 cities and almost 30 venues including stadiums -- AT&T has had high-frequency spectrum commonly referred to as millimeter wave, or mmWave, which AT&T brands as 5G+.
  • G
    Gael
    Spin or Split? AT&T Has a Big Decision to Make on Discovery Stake. / Andrew Bary
    That is the decision that T faces as it considers what to do with a 71% stake in DISCA that it will receive when it merges its WarnerMedia business with Discovery in a deal that could close early in the second quarter.
    UBS analyst John Hodulik wrote in a recent note that he believes AT&T “is leaning toward a split of the asset”–an exchange of AT&T stock for shares in Discovery, which will change its name to Warner Brothers Discovery.  The deal, he added, could be a catalyst for AT&T stock, which has rallied this year after a poor 2021.
    AT&T shares are nearly 9% higher, at $27, so far in 2022. Hodulik has a Buy rating and price target of $34 a share on the stock.
     A spinoff would be straightforward. AT&T would distribute an estimated 1.7 billion shares of the merged company to its shareholders, who would get nearly 0.25 share of Warner Brothers Discovery for each AT&T share. Such a move would be worth about $7 per AT&T share based on Discovery’s recent price of $30. Discovery stock is up over 20% in 2022, making it one the top stocks in the S&P 500.

    The other option—a split-off—is more complicated. AT&T would offer holders the option of swapping their AT&T stock for Warner Brothers Discovery stock. To entice conversion, AT&T would likely offer its investors a bonus, with Hodulik suggesting a deal of one share for one share.

    That would be appealing to AT&T holders since Discovery now trades roughly $3 a share above AT&T stock.

    The benefit of a split-off is that AT&T could retire about $45 billion, or 1.7 billion of its roughly 7.2 billion shares outstanding. Hodulik says the AT&T dividend, now 7.8%, likely would be close to 6% in either scenario after the deal based on the company’s prior financial guidance.

    Another benefit of a split-off is that AT&T holders could choosewhether they want to hold AT&T stock or swap it for Warner BrothersDiscovery. A benefit of a spinoff would be that all AT&T holders wouldget Warner Brothers Discovery shares and be able to participate in anygains in the media company’s stock.

    Some analysts think a split-off is more likely than a spinoffbecause of the ability of AT&T to potentially retire almost a quarter ofits stock at a low valuation.
    Kannan Venkateshwar, a Barclays analyst, last month called asplit-off “the most obvious way to go in terms of deal structure.”

    In a spinoff, the new dividend would be about $1.18 share while it would be around $1.55 a share with a split-off, Hodulik estimates. The yield would be slightly higher in a spinoff scenario.

     Hodulik sees AT&T as attractively valued at about six times projected 2023 earnings of $4.43 a share in a split-off scenario, a discount to rival

    Verizon Communications (VZ), at nearly 10 times projected 2023 earnings and a 4.7% dividend yield.

    Asked about the spin-versus-split scenario, AT&T CFO Pascal Desroches was noncommittal at a December conference appearance: “We think both are great ways to do — both a split and a spin are great mechanisms for delivering value. And we’re not going to make the decision until we get closer to the time of the separation to ensure that we have complete information, including the relative share prices of the two entities.”

    Hodulik wrote: “We believe clarity over deal structure and the improved visibility over EPS, FCF (free cash flow), and dividends per share will be a catalyst for AT&T shares, while an exchange structure would enable shareholders to determine their own exposure to Warner Bros. Discovery. We believe AT&T will emerge from this transaction as a leaner, more focused entity better able to invest in its core connectivity businesses.”
  • R
    Red Equal
    If Russia attacks Ukraine, as is expected, I am selling my shares. The market, including T, will surely drop with the war.
  • T
    Tony
    Any clarify on the spin-off yet? I have 138 shares of AT&T, want to buy to make sure I have a decent chunk of WBD once the spin off happens.
  • A
    Anonymous
    HBO Max eating Netflix lunch. T should be trading at 30.
  • A
    Andre
    Split off vs. spinoff.
    I think it's terrible that management is considering a split off.
    It's like forcing people to pick a checkout line instead of waiting in a single feeder line until you see which cash register opens up first.
    Every shareholder is capable of selling one or the other stock at a time of their choosing. I don't understand why T should force shareholders to pick.
  • N
    Nick
    I may be missing something but why isn't TMobile's 5G part of the airline issue, or they using a different channel?
    Bullish
  • c
    cheetah2
    T is doing good.

    Oil is up again. $86.90 per barrel today and closing in on $87.
  • J
    Jim
    Earnings whisper is 0.82$ vs 0.78$ consensus.
  • V
    Vagician
    T is forming a ramalamadingdong chart pattern. Will go to $100.
    per share quickly.
    Maybe as early as tomorrow.
    GLTA👮🏻‍♂️🕶
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