All eyes were on AT&T this week after the activist Wall Street investment firm Elliott Management trashed the company for a litany of things—including its track record in wireless—but the Communications Workers of America (CWA) called out the billionaire founder of the firm and CEO Paul Singer for targeting American jobs.
Instead of allowing Elliott to raid the company’s assets, AT&T should invest in its core business by delivering high-speed internet, video and wireless service to all Americans and invest in its workforce through improved training and retention programs, the union said.
“Elliott Management has taken the obsession with shareholder value to an extreme, pushing proposals that in the end benefit only a small subset of shareholders - themselves,” said CWA President Chris Shelton in a statement. “Anyone who thinks that Paul Singer and Elliott Management intend to ‘deliver far-reaching benefits’ to AT&T’s customers is not familiar with the destruction this vulture hedge fund leaves in its wake.”
In its lengthy September 9 letter to AT&T’s board, Elliott, which owns a $3.2 billion stake in AT&T, trashed numerous aspects of AT&T’s business, including its attempted, but failed, purchase of T-Mobile and its acquisition of DirecTV. In a section titled “Poor Execution in Wireless,” the firm recounted AT&T’s struggle to scale and add capacity when it had the exclusive on the iPhone in 2007 and said it let Verizon get a head start on LTE, thereby earning a reputation for superior network quality, among other things.
When AT&T CFO John Stephens spoke at the Bank of America Merrill Lynch conference in Los Angeles on Wednesday, he was asked about the Elliott letter, and he limited his comments to the earlier statement that the company put out. AT&T said it looked forward to engaging with Elliott and that many of the actions outlined are ones it’s already executing on.
In terms of the retail footprint and operations specifically, Elliott said AT&T has opportunities to increase flexibility and reduce costs in its retail footprint, including closing redundant stores and increasing labor productivity. “AT&T can also evaluate greater use of authorized retailers, an area where it significantly lags competitors today,” the activist investment firm stated.“We’re encouraging the board to not go down that road that Elliott is proposing, that sort of corporate raider playbook, with always thinking the shareholder value is the only thing to focus on and that the stock price is the only thing to care about,” she said.
CWA’s research department is still reviewing Elliott’s document, but it’s pretty clear they intend to extract profit by reducing headcount of the workforce, either by pushing folks out, working with contractors or relying more heavily on authorized retailers rather than company-owned stores, which isn’t good for CWA members or the communities where they work, CWA Communications Director Beth Allen told Fierce Wireless.
CWA’s orientation is more around the Business Roundtable statement where the idea is to pivot from shareholder value as the only metric to things that more broadly support a diversified economy, where employees, suppliers, customers and communities are brought into the picture rather than just shareholders, according to Allen.
CWA has been a big opponent of the proposed merger between T-Mobile and Sprint.
Allen said CWA wants to see more investment in building high-speed networks, both 5G and wireline. What it saw with the fiber buildout is operators were willing to go into higher income and higher density areas, leaving big parts of the country underserved, and it fears a similar problem could occur with 5G, she said.