Telecom Stocks Extend Losses After WSJ Toxic Lead Investigation
By Will Feuer
Shares of AT&T, Frontier Communications, Lumen Technologies and other telecommunications companies extended their losses on Monday as analysts responded to a Wall Street Journal investigation that revealed U.S. phone companies have left behind a network of cables covered in toxic lead.
AT&T stock fell 4.4% in morning trading, touching its lowest level in some 30 years. Frontier shares fell 8.8% to $13.04 and Lumen stock dropped 3.5% to $1.78. Verizon Communications shares fell 2.1%.
Monday's declines extend losses in the sector from last week. Since the WSJ investigation began to publish, AT&T, Verizon, Lumen and Frontier had shed a collective $18 billion in market cap before Monday's losses, MoffettNathanson analysts Craig Moffett and Nick Del Deo said earlier Monday.
"We could see what amounts to a general telecom buyer's strike for some time," the analysts said.
Analysts at TD Cowen said it is too early to size up the potential financial fallout of the issues stemming from the WSJ investigation. "Nonetheless, we see a considerable overhang for the foreseeable future," they said.
The TD Cowen analysts said they expect a drawn-out process and "plenty of political squabbling with potential class action lawsuits and AG lawsuits" tied to the lead-covered cable issues.
Analysts at Citigroup downgraded AT&T, Frontier and Telephone & Data Systems on Monday. They echoed the other analysts in saying that the scope of the fallout from the lead-covered cable issues remains uncertain, but said they expect the matter to be an overhang on the stocks for now.
The latest reactions from Wall Street analysts follow other notes on the topic issued last week. NewStreet Research analyst Jonathan Chaplin estimated last week that the removal of all lead-cased copper wires across the country could cost as much as $59 billion.
The Journal investigation showed how phone companies have left behind more than 2,000 old lead-encased phone cables, hung up on poles, under waterways and in the soil around the U.S. Journal testing found numerous cables leaching lead into soil and water, at levels exceeding regulatory safety guidelines.
AT&T and USTelecom, an industry group, have created webpages disputing the environmental and public health impacts of the lead cables. They have claimed that the safety of such cables is backed by studies and science. They declined to provide any such studies to the Journal and didn't include them on their websites. They also declined to provide a full accounting of the number of lead cables in their networks to the Journal.
Write to Will Feuer at Will.Feuer@wsj.com
(END) Dow Jones Newswires
July 17, 2023 10:33 ET (14:33 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.-
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