Activist Shareholder at AT&T Proposes Company Strategy

By Zach Cooney
Money & Investing Writer

Elliot Management Corp. aims to raise AT&T’s stock by 60 percent by 2021 (Photo courtesy of Luismt94, WikiCommons)

A new investor at AT&T recently revealed its stake in the company, and it is not the traditional investor looking to buy a small part of the equity. That new investor is Elliott Management Corp and they are an example of an “Activist Investor,” meaning it wants to develop a board of directors and focus on internal issues of the company they have a stake in.

One of the first things Elliott Management Corp did was tell AT&T to stop acquiring smaller businesses and start to improve the company from the inside. Elliott believes it can help raise AT&T’s stock 60 percent by the end of 2021. AT&T, which owns companies such as CNN, Home Box Office, and TBS, will be asked to cease all plans to acquire new businesses as Elliott wants CEO Randall Stephenson to stop spending unnecessary money. Another issue concerning shareholders is that Stephenson holds both the CEO and chairman positions. Elliott looks to revamp AT&T by adding new directors to its board and to stop a failing conglomerate strategy.

On the other hand, Elliott took a contradictory tone in a letter it wrote to AT&T, calling it an important company before becoming critical of it. Instead of there being slow negotiations between both parties, it seems talks and resolutions may happen quicker than expected because shareholders are worried over slow market gains. AT&T spent billions of dollars on acquisitions, amassing enormous amounts of unnecessary debt. Furthermore, the recent acquisitions of CNN and Time Warner had antitrust authorities wary of possible deals.

Lastly, Elliott recommends that AT&T hire a third party to manage its affairs, eliminating any burden and creating a company that will produce higher revenue with higher market gains. Elliott said that a new strategy will help AT&T eliminate debt rather quickly.


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