Tags: at&t | stock | downgrade | price | time warner

AT&T Stock Downgraded to 'Sell' Amid $249 Billion Debt Load

AT&T Stock Downgraded to 'Sell' Amid $249 Billion Debt Load
(Dreamstime)

Wednesday, 13 June 2018 08:41 AM

Shares of AT&T Inc. fell and the stock earned at least one downgrade on Wednesday after a federal judge approved the telecom company’s $85 billion buyout of Time Warner Inc, clearing the path for more deals in a rapidly changing media industry.

The news lifted shares of other telecom and media companies such as Sprint Corp., CBS Corp. and Discovery Inc. by around 4 percent in premarket trading. Time Warner was also up about 5 percent.

“Once technically driven volatility wears off we expect the stock to move higher as closure will likely provide a new investor catalyst including $1.5 billion in anticipated cost synergies,” said Cowen & Co analyst Colby Synesael.

However, at least one analyst raised concerns about the debt AT&T was taking on as part of the deal.

“Time Warner will be a positive for AT&T’s income statement, at least initially. But it will be a negative for the balance sheet,” said research firm Moffett Nathanson’s Craig Moffett, who downgraded the stock to “sell”.

“The new AT&T will carry an astounding $249 billion of debt.”

The approval for the deal, which was opposed by President Donald Trump’s administration, marks a turning point for cable, satellite and wireless carriers all eyeing to buy content companies as a way to add revenue.

Following the approval, investors are looking out for an announcement from U.S. cable operator Comcast Corp., which last month said it was preparing to outbid Walt Disney Co.’s $52 billion offer to buy most of Twenty First Century Fox Inc.’s assets.

To be sure, AT&T's debt load drew some public criticism.

Craig Moffett, founder of MoffettNathanson, a research firm, told CNBC that AT&T is one of the most indebted companies in the world — about $249 billion in debt. Buying Time Warner will not ease this burden.

"That's a risky proposition," Moffett said.

© 2018 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
StreetTalk
The news lifted shares of other telecom and media companies such as Sprint Corp, CBS Corp and Discovery Inc by around 4 percent in premarket trading. Time Warner was also up about 5 percent.
at&t, stock, downgrade, price, time warner
305
2018-41-13
Wednesday, 13 June 2018 08:41 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved