Shares of AT&T plummeted to their lowest closing price since February 1993, after a Wall Street Journal investigation revealed toxic lead cables left by telecommunications companies across the U.S. The stock price dropped by 6.7% to $13.53 per share, a 13% decrease since the investigation published on July 9. The report disclosed that telecom companies, including AT&T, left over 2,000 old lead-encased cables across the country, part of the Bell System’s regional telephone network. Lead leaching into soil and water at levels beyond regulatory safety guidelines sparked Wall Street analysts' concerns about potential liabilities and their impact on the bottom lines of these companies.
Other telecommunication companies suffered similar fates, with Verizon Communications dropping 7.5%, marking its worst one-day performance since October 2008, and Frontier Communications and Lumen Technologies plummeting 16% and 8.1% respectively. AT&T disputed the Journal's findings, stating that their claims regarding potential harm associated with lead cables contradicted independent expert opinions, long-standing science, and AT&T's own tests.
Collectively, AT&T, Verizon, Frontier, and Lumen have lost approximately $36 billion in market value since the WSJ investigation was published. Verizon announced its seriousness in addressing concerns about lead-sheathed cables and said that it has been modernizing its network for two decades, with only a minor percentage of the network currently including lead-sheathed cable. Meanwhile, a USTelecom spokesperson stated that there is no evidence that legacy lead-sheathed telecom cables significantly contribute to lead exposure or public health issues.
Despite these statements, Wall Street analysts downgraded their ratings on AT&T, Frontier, and other telecom companies, contributing to the sector's continuing downturn. Citigroup analysts reduced their ratings on AT&T, Frontier, and Telephone and Data Systems, while maintaining a neutral stance on Verizon. The costs associated with removing all lead-cased copper wires across the country could potentially reach as high as $59 billion, according to New Street Research. Analysts and investors are now keenly awaiting quarterly results and statements from these telecom companies' management in response to the fallout from the investigation.
