Title: AT&T Stock Surges as Company Faces Potential $4 Billion Cable Cleanup
AT&T’s stock experienced a significant boost of over 7% on Wednesday morning, following the release of a court filing late Tuesday that shed light on the telecommunications giant’s exposure to lead-clad cables.
According to analysts at Goldman Sachs and Morgan Stanley, the cost of removing these cables could range from $2 billion to a staggering $4 billion. The revelation came after AT&T’s market capitalization had dropped by almost $15 billion prior to the release of the court filing.
Surprisingly, not only did AT&T’s stock bounce back, but the disclosure also sparked a rally among shares of other major telecom companies such as Verizon and Frontier Communications.
Goldman Sachs estimates that the removal of approximately 60,000 miles of lead-sheathed cables could account for the hefty cleanup expenses. Morgan Stanley equity analyst Simon Flannery echoed similar potential costs, estimating the figure to be around $4 billion.
The revelation had significant consequences for AT&T, as Wall Street firms decided to downgrade the company’s stock following a Wall Street Journal report confirming that AT&T’s historical use of lead-covered cables is contaminating parts of the country.
JPMorgan had already downgraded AT&T before these recent developments, citing the unquantifiable liability associated with the lead cables.
Nonetheless, AT&T provided access to a court filing from its subsidiary, Pacific Bell Telephone Company. The filing stated that lead-clad cables account for less than 10% of its copper footprint.
For instance, Goldman Sachs estimates that the cost of removing Pacific Bell Telephone Company cables in Lake Tahoe could be on the more expensive side, considering that those cables are currently submerged underwater.
AT&T, however, maintains that further analysis is required to accurately evaluate the safety of the cables in question.
As AT&T confronts this significant potential financial burden, the stock market responded positively to the company’s disclosure. Nonetheless, the journey ahead for AT&T remains uncertain as the cleanup costs hovering around $4 billion loom large on its financial horizons.
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