AT&T is addressing concerns regarding potential liability from lead-sheathed cables and challenging recent stock market declines alongside its rival, Verizon Communications. The telecommunications company announced on Tuesday that it would suspend the removal of two lead-clad cables in Lake Tahoe, opting instead for additional testing and discussions with regulators. This decision is part of AT&T’s response to reports from The Wall Street Journal highlighting potential health risks associated with copper telecommunications cables wrapped in lead. As a result of these reports, AT&T experienced its lowest closing stock price in over three decades on Monday, while Verizon reached a thirteen-year low.
Brandon Nispel, an analyst at KeyBanc, stated in a research note that the stock prices likely already reflect any reasonable estimate of liability, which has ranged from $5 billion to $50 billion. He further noted that AT&T may have a higher exposure due to its historical operations, implying that favoring Verizon stock may be more prudent in the short term.
According to Oppenheimer analyst Timothy Horan, the total industry liability is probably closer to $2-20 billion at most, considering the $30 billion hit the sector has already suffered due to this news story. Horan also stated that Verizon seemed like a safer investment choice compared to AT&T due to its lower lead exposure.
In premarket trading on Wednesday, AT&T shares rose by 3.7%, while Verizon experienced a 2.9% increase.
