AT&T Stock Hits Lowest Level Since 1993 Amid Lead Cable Controversy
On Tuesday, AT&T’s stock fell to its lowest level since 1993, continuing its downward trend after a report revealed that several of the country’s largest network providers, including Verizon and AT&T, left thousands of lead-covered cables in various locations across the United States.
The Wall Street Journal published a report on July 9, highlighting that these companies left cables coated in lead from the Bell System’s telephone network buried in the ground, present in water sources, and mounted on transmission poles. The investigation prompted a series of downgrades from analysts, leading to a sharp sell-off in telecom stocks. Since the report’s release, AT&T shares have dropped approximately 14%, Verizon declined 10%, and Frontier Communications experienced a staggering 33% slide.
JPMorgan Chase analysts downgraded AT&T to neutral from overweight last Friday and lowered its price target to $17 from $22. Their concerns partly stem from the perceived “potential liability as an unquantifiable, long-term overhang for the stock.”
The downward spiral continued on Monday as more downgrades poured in from Wall Street analysts. David Heger, an analyst from Edward Jones, downgraded AT&T to a hold rating from buy, citing concerns that the investigation could restrict the stock’s upside and potentially lead to legal actions against the company.
On Tuesday, AT&T’s shares closed at $13.45, marking their lowest closing price since 1993. Similarly, Verizon shares fell 7.5% to $31.46 on Monday, reaching their lowest closing level since 2010 before showing a slight recovery on Tuesday.
In response to the investigation, AT&T stated that it is conducting additional testing, including at locations mentioned in the Journal’s report. The company previously responded to the investigation, disputing the Journal’s testing methodologies and asserting that their cables pose no public health risks or threats to workers when proper safety measures are in place.
However, the fallout from the lead cable controversy could have significant financial and reputational implications for telecommunications companies. Neil Mack, Vice President for Moody’s Investors Service, warned that this situation could have similar effects to the environmental and litigation impacts of historical asbestos and lead paint cases on industry participants.
Lawmakers have also responded to the revelations, demanding further investigation into the network of toxic lead cables. Democratic Sen. Edward Markey penned a letter to Jonathan Spalter, CEO of telecom industry group USTelecom, pressing for answers on how they plan to address the environmental and health concerns that may be putting people at risk.
In response to the situation, USTelecom stated that they are “engaging with stakeholders on this important matter” and emphasized that the telecom industry prioritizes the health and safety of communities and workers. They pointed out that there is no evidence to suggest that legacy lead-sheathed telecom cables are a leading cause of lead exposure or public health issues, as far as regulators have identified.
