AT&T and Elliott Management Corp. recently reached an agreement that will see the telecommunications giant undertake significant changes to its business operations. The agreement comes after months of negotiations involving both parties and was announced on September 9, 2019.
Elliott Management, an investment firm with a track record of pushing companies to improve their financial performance, had been pressuring AT&T to make changes. The firm owns approximately 1.2% of AT&T`s stock and had publicly criticized the company`s management, strategy, and acquisitions.
The agreement reached between AT&T and Elliott Management includes several key provisions, including a commitment to divest non-core assets. The company plans to sell off up to $10 billion worth of assets over the next three years. Some of the assets being considered for sale include its stake in streaming service Hulu and its regional sports networks.
AT&T will also undertake a review of its portfolio of businesses and assets to identify additional areas where it can reduce costs and improve operational efficiency. The company has committed to achieving $6 billion in cost savings by 2021.
In addition, the agreement includes a commitment to improve the company`s corporate governance and management practices. AT&T will add two new independent directors to its board, and there will be a review of the company`s executive compensation plans.
The agreement has been welcomed by investors, with AT&T`s stock price rising in the days following the announcement. Analysts have praised the company for taking steps to address investor concerns and improve its financial performance.
However, some observers have expressed skepticism about the agreement`s impact on the company`s long-term prospects. While the asset sales and cost-cutting measures may provide a short-term boost, some analysts have questioned whether the company`s underlying business model is sustainable in the long term.
Overall, the AT&T-Elliott Management agreement is a significant development in the telecommunications industry. It highlights the increasing pressure on companies to deliver results and satisfy investors, as well as the role that activist investors like Elliott Management can play in shaping corporate strategy and governance. Only time will tell whether the changes implemented by AT&T will be enough to satisfy investors and position the company for long-term success.
