Activist investor Elliott Management has conducted a comprehensive review of AT&T's business management over the last decade and has not reached a favorable conclusion. In an open letter to the board of directors of AT&T, Elliott, which owns a $ 3.2 billion stake in AT&T, revealed many aspects of AT&T's business, including its experience but the unsuccessful purchase of T-Mobile and the acquisition of DirecTV. But in the interest of FierceWireless readers, Elliott wrote an entire section entitled "Poor Wireless Performance."
Elliott says that AT&T has failed to fulfill strategic capabilities over the past decade and compares AT&T to Verizon unfavorably.
"While Verizon was moving as fast as it could to deploy 4G LTE, AT&T had initially disappeared, essentially launching Verizon," Elliott's letter said. "Verizon has benefited and performed well, quickly being the first to scale its LTE footprint, earning a reputation for superior network quality, as well as $ 20 billion in additional wireless revenue."
The letter also alleges that AT&T has opted out because "T-Mobile interrupts the industry by eliminating contracts while offering family plans and unlimited packages."
The main consequence of these failures is the consistent relinquishing of market share. The investor activist said: "Over the last decade, T-Mobile has increased its share of Big 4 wireless revenue by about 600 basis points, while AT&T's share has shrunk about 400 basis points, making it the worst representative of the group. ”
[196590също] gave AT&T management a disgusting view of its ability to recruit and retain talent. He said the company suffers from a bureaucratic organization.
"In addition, there is growing concern about depth of leadership even in AT&T's core businesses," Elliott said. "These fears have been underlined just recently by the announced (and surprising) departure of AT&T Communications CEO."
AT&T Communications CEO John Donovan said it had been effective October 1 after nearly 12 years with telco. Donovan manages a collection of wireless, cable and entertainment assets, accounting for about 80% of company-wide sales.
"Instead of doing a thorough search for the most qualified executives, AT&T decided to wait a week and then announced that the recently installed WarnerMedia CEO was, in itself, a massive and very different business that obviously requires a full-time manager. business day – he will now also be responsible for an additional $ 145 billion in revenue as president and COO of the entire company, "Elliott said.
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In response, AT&T issued a statement today, saying , "Our managerial The team and the board of directors maintain a regular and open dialogue with shareholders and will review Elliott Management's prospects in the context of the company's business strategy. We look forward to engaging with Elliott. In fact, many of the actions outlined are those we are already undertaking. " And coming to the defense of AT&T, a research note from Wells Fargo analyst Jennifer Fritsche stated that AT&T was already making many of Elliott's proposals (except for changes in management), "Remember, T continued to focus on sales is assets to reduce leverage to 2.5 times and talked about the potential purchase of the shares, "says Fritz. She also noted that while AT&T has not launched a voluntary compensation program similar to Verizon – which has opened benefits for more than 11,000 employees, the total number of AT&T employees has decreased by 15,420 (or 5.6%) since the second quarter of 2018. .  Everything is not lost
After a brutal assessment, Elliott concludes that AT&T has valuable assets and some things go in its favor, in particular, the chance to lead in 5G, given possession. of the spectrum and its recent improvements to the network. powered by the construction of FirstNet.
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"We believe AT&T is best positioned to be the market leader in 5G," Elliott said. "Accelerated by the establishment of FirstNet, AT&T differentiates between strong spectrum positioning (both mmWave and midrange), highly virtualized and software-based networking, leading business solutions (both wireless and telecast) and premium IoT franchising. "
Elliott asked AT&T to launch a formal review process to initiate 'core portfolio actions'. The company said AT&T has a chance to move quickly while its main competitors remain either disadvantaged or distracted as they integrate large transactions.