AT&T is under pressure from Elliott Management to reduce operating costs and suspend future expansion plans. The activist investment company, which is part owner of the telecom firm, is currently in talks with AT&T to discuss acceptable outcomes for both parties.
Elliott Management, an investment company known for exerting influence on companies in which it has a stake, sent a plan to AT&T six weeks ago with a number of proposed changes. The investment fund says that these changes could increase AT&T’s stock prices by at least 60 percent by the end of 2021, says Reuters.
Elliott’s shares in AT&T are worth $3.2 billion. The pressure that investors are now putting on the American telecom giant is one of the most ambitious campaigns in years. This is not only because of the size of AT&T, but also because of the large number of problems that Elliott believes need to be solved.
Elliott’s ambitions include divesting certain subsidiaries, reducing operating expenses by $5 billion, rearranging the allocation of capital, and ensuring that CEO Randall Stephenson stops planning acquisitions of other companies.
Elliott’s criticisms included the acquisition of TimeWarner Inc., which cost AT&T 85 billion dollars. The acquisition of DirecTV for 49 billion dollars in 2015 was also mentioned in the letter to AT&T. Elliott also stated that AT&T needs people with practical expertise and knowledge of the sector on its board of directors. In addition, Elliott stated that it already has “multiple potential candidates” in mind.
AT&T has revealed that it is already investigating a number of Elliott’s points of critique. AT&T and Elliott spokespersons have not commented so far.