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AT&T Inc’s turnaround — an exacting mission that has involved selling nearly everything acquired under its former chief executive officer — is finally showing signs of working. But this long-awaited progress on the business front comes as the Dallas-based wireless giant’s public image takes a bruising. It has come to be seen by some as the corporate villain behind both the Texas abortion controversy and the rise of a pro-Donald Trump media network that has spewed baseless claims of a stolen election.
AT&T’s stock price, which opened 1% higher before erasing those gains, remains near an 11-year low. The company posted a third-quarter profit that beat analysts’ expectations and added almost twice as many wireless customers as analysts predicted. While the industry’s aggressive free-phone promotions of late helped, AT&T has said that a renewed focus on that business and a combination of moves to improve customer service are reviving the brand. It didn’t matter that subscriber growth at its HBO Max streaming-TV business was tripped up by the decision to break from a distribution relationship with Amazon.com Inc; with AT&T already agreeing to sell HBO and the other WarnerMedia assets to Discovery Inc next year, investors now only care about the performance of the 5G wireless and home-internet businesses.
It was only a year ago that investors could still hear AT&T executives defending the company’s debt-fueled buying spree, even as it was clear from the outside that the story was becoming too complex. They painted a future in which owning HBO Max would help the wireless business sell phone plans and retain customers, owning DirecTV would give it a bigger consumer base to draw from and owning an advertising-technology business would allow it to profit from valuable customer data. But by mid-2022, if all goes according to current CEO John Stankey’s plan, AT&T won’t own any of those subsidiaries anymore.
The goal is for AT&T to revert back to its telecommunications roots without distractions or other businesses draining crucial resources and threatening its all-important dividend. Building a data network isn’t cheap. But that also promises to be a much more reliably profitable investment in the long run than the razor-thin margins of streaming and the dying satellite-TV market. Selling assets that aren’t making AT&T better will certainly aid that mission.
—Bloomberg