AT&T Chief Defends M&A

Randall Stephenson

Kicking off an investment conference hosted by Goldman Sachs in New York, AT&T CEO Randall Stephenson has pushed back on Elliott Management’s complaints of mismanagement at the telecom and media giant.

Deadline reports Stephenson also offered an endorsement of key lieutenant John Stankey and said the sweeping tax cuts enacted at the end of 2017 have spurred wage gains for low-income workers and “crazy-low” unemployment rates.

“We’re going to evaluate it and see what makes sense for our shareholders,” Stephenson said of a barbed letter issued a week ago by Elliott Management, an activist hedge fund. After attaining a $3.2 billion stake in AT&T, Elliott issued a blistering critique of AT&T, saying its shares have underperformed peers and the S&P 500 over the past decade due to management missteps. Chief among the errors, per Elliott, has been buying DirecTV and Time Warner, two megadeals that together cost nearly $150 billion, not including debt.

The 40-minute session did not dwell too much on the declining fortunes of the company’s pay-TV operations. AT&T lost more than 1 million subscribers in the previous quarter and expects significant losses in the upcoming period.

Without mentioning President Trump by name, the CEO offered a full-throated celebration of Trump’s tax reform act, which passed in December 2017 and boosted the balance sheets of corporations. “It’s hard for somebody to argue that Tax Reform Act – as it relates to corporate, not personal, because that’s a whole other matter – has been anything but positive,” Stephenson said.

Because of the tax cuts, he continued, “Unemployment is at crazy-low levels,” he said, particularly among African-American and Latino workers. “We ought to be doing high-fives,” Stephenson said. “Wage gains at the low end of the scale are greater than wage gains at the high end of the scale.”