Telecom Stocks Rise as Investors Size Up Impact of Lead Cables

By Will Feuer

Shares of AT&T, Verizon Communications and other telecommunications companies were higher early Wednesday as executives and investors sought to get their arms around the matter of lead-covered cables.

Shares of AT&T rose 5.6% to $14.20 in premarket trading, while Verizon stock rose 3.8% to $33.50. Shares of Frontier Communications climbed 9.8%, Telephone and Data Systems stock rose 3.7% and Lumen Technologies shares were up 4.3%.

The rebounds come after a days-long selloff pushed shares of AT&T, Verizon and others to multiyear lows. The selloff was sparked by a Wall Street Journal investigation revealing that U.S. phone companies have left behind a network of cables covered in toxic lead.

AT&T Chief Executive John Stankey said in a memo to employees Tuesday that the company expects an extended public discussion about how to manage lead-clad cables. He also estimated that "these cables represent less than 10% of our copper footprint of roughly 2 million sheathed miles."

That followed a release earlier this week by TDS, which said it had located about 10 miles of lead-covered cables across its network.

Some Wall Street analysts said the industry may not get dealt as large a blow as they initially had anticipated. Analysts at Oppenheimer, who earlier ballparked the financial fallout from the lead-cable issue at $5 billion to $50 billion, took their estimate down to $2 billion to $20 billion.

Analysts at Raymond James said it is sounding like the industry will deal with the lead-cable issue over many years and it is unlikely it will disrupt current capital spending plans tied to 5G and fiber-optic network expansions.

TD Cowen analysts, citing an "impromptu investor call" held by AT&T Tuesday evening and the analysts' own assumptions, said the financial risk for the company could be about $246 million a year, "if any risk at all."

Write to Will Feuer at [e-mail]

(END) Dow Jones Newswires

July 19, 2023 08:44 ET (12:44 GMT)

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