Monday, January 11, 2021

AT & T equity research: AT&T bought DirecTV for $49 billion. It’s still paying a price for the deal

 Here is the link. 

Four years ago, AT&T purchased DirecTV for $49 billion, or $67.1 billion including debt. Now DirecTV is flailing badly enough that it is at the heart of an activist shareholder revolt against AT&T’s business strategy.

Elliott Management, an activist hedge fund, released a letter to AT&T’s board Monday in which it said that it has taken a 3.3% position in the company and wants to see changes. It specifically called out the DirecTV acquisition in the letter, saying the move has had “damaging results.”

So what happened?

Will Power, a senior research analyst at Baird, told CNN Business that AT&T bought DirecTV because it was looking for something that would expand its offerings and “help differentiate them in the market.”

“They were facing wireless competitive pressures and seeking a way to diversify,” he said.


At the end of the fourth quarter of last year, AT&T reported that the service had 1.6 million customers. It currently has 1.3 million. Analysts have predicted those losses will continue.

14:38/ 16:08

Expected returns by end 2030

  1. Best choice
  2. $50 - good economy
  3. Exuberance, lower debt
  4. 10% chance - 10x DIV - 250% Return
  5. Second choice
  6. $25 to $30 range
  7. 10 dividends - 50% chance
  8. Third choice
  9. Below $20 - 30% chance 
  10. Bad economy, higher rates, debt issues! Times will change

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