AT&T (NYSE: T ) shares are moving over 5% higher in pre-open Wednesday after the telecom giant provided an update on its nationwide copper-wire telecom network. Verizon (NYSE: VZ ) shares are up about 4%.
The Wall Street Journal previously published an extensive report about the U.S. being covered in "toxic lead cables." Shares in telecom stocks moved lower on the back of this reporting with analysts highlighting it as a major fundamental risk facing the telecom sector in the coming years.
AT&T shares hit a 29-year low while Verizon moved to the lowest levels since 2011. The former's stock was also hit with two downgrades (JPMorgan and Citi).
However, AT&T said that lead-clad cables make up a “small part” of its network of about 2 million miles of cable. About two-thirds of these 2 million miles are “either buried or in conduit” with a “very small portion” running underwater. Moreover, the overwhelming majority of this network remains in active service, according to AT&T.
The telecom giant has also decided not to proceed with the removal of the two telecom cables from the bottom of Lake Tahoe as it will allow further analysis by interested parties, including the U.S. Environmental Protection Agency (EPA).
TD Cowen analysts estimate the financial risk at about $246 million a year, “if any risk at all.”
Similarly, Barclays analysts added:
“The impact of lead contamination headlines on telecom stocks has been a lot worse than comparable precedents and seems overdone.”
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.