Shares of AT&T, Verizon Communications and other telecommunications companies were higher early Wednesday as executives and investors sought to address the issue of lead-covered cables.
AT&T saw a 5.6% surge to $14.20 in premarket trading, while Verizon experienced a 3.8% increase to $33.50. Frontier Communications also climbed 9.8%, Telephone and Data Systems rose by 3.7%, and Lumen Technologies saw a 4.3% rise in shares.
These rebounds come after a recent selloff which had pushed the shares of AT&T, Verizon, and other companies to multiyear lows. The selloff was instigated by an investigation by the Wall Street Journal that revealed abandoned network cables covered in toxic lead.
AT&T Chief Executive John Stankey addressed the issue in a memo to employees on Tuesday, acknowledging the expectation for an extended public discussion on managing these lead-clad cables. He estimated that these cables make up less than 10% of their overall copper footprint, which amounts to approximately 2 million miles.
Just earlier this week, TDS announced that they had located around 10 miles of lead-covered cables across their network.
Initially, some Wall Street analysts predicted a larger impact on the industry. However, analysts at Oppenheimer revised their estimate from $5 billion to $50 billion down to $2 billion to $20 billion regarding the financial fallout from the lead-cable issue.
Raymond James analysts also commented that it seems like the industry will handle the issue over several years, without disrupting current capital spending plans related to 5G and fiber-optic network expansions.
TD Cowen analysts held an “impromptu investor call” with AT&T on Tuesday evening and made their own assumptions regarding the financial risk for the company, suggesting it could be around $246 million per year, “if any risk at all.”
