After Buying Things For A Decade, AT&T Is Downsizing

AT&T cast light on its pending spinoff of WarnerMedia to Discovery this past week—a big step toward putting a decade of misguided mergers and acquisitions behind it. 

Barron's reports AT&T spent years dishing out billions of dollars on deals, including $66 billion for DirecTV in 2015 and $106 billion for Time Warner in 2018. These brought the 145-year-old phone company into new, more-cyclical industries, and at one point made it the most indebted company in the U.S.

Under new CEO John Stankey, AT&T has slimmed down. AT&T spun off DirecTV and other pay-TV assets, and sold its Xandr advertising platform to Microsoft . With WarnerMedia gone in the second quarter, management can focus on 5G wireless and fiberoptic broadband: high fixed-cost businesses with attractive economies of scale and recurring subscription revenue.

Shedding its conglomerate structure won’t make challenges evaporate for AT&T. Competition is growing, especially as subscriber growth slows after a pandemic boost. AT&T must spend to grow its 5G C-band network to 200 million Americans by the end of 2023, and reach 30 million homes and businesses with its fiber network by the end of 2025.