AT&T Hopes Tracker Helps Stock11/28/1999 7:00 PM Eastern
AT&T Corp. is moving toward issuing a wireless tracking
stock that could help to finance its fixed-wireless-telephony strategy and bolster the
parent company's sagging stock as its pending acquisition of MediaOne Group Inc.
It is anticipated that the company will announce the
tracking-stock plan -- which will include its mobile and fixed-wireless assets -- at an
analysts' conference in New York Dec. 6.
In addition, AT&T is expected to name current chief
financial officer Daniel Somers as the permanent head of its AT&T Broadband &
Internet Services unit. Somers stepped into the AT&T Broadband role after division
president Leo J. Hindery Jr. left the company Oct. 6. AT&T spokesman Marc Siegel
declined to comment.
According to sources, AT&T floated the
wireless-tracking-stock proposal at an analysts' meeting with AT&T Wireless
Services president Dan Hesse about two weeks ago.
Although the market has reacted well to the decision to
issue the tracking stock -- some published reports valued the wireless assets at as high
as $60 billion -- some analysts are disappointed that fixed-wireless assets would be
"It's going to muddy up the valuation," said
one analyst who asked not to be named. "It doesn't make it a pure wireless
However, the analyst added that the tracking stock was a
good idea for AT&T, and rumors that the company will issue it have already pushed up
its stock. "Overall, it's a good strategy," the analyst said. "The
stock has not been performing well, and wireless stocks are red-hot."
AT&T has an incentive to boost its stock -- the
currency to be used in its pending acquisition of MediaOne. Under terms of the deal,
AT&T would have to contribute a substantial amount of cash if its stock dips below
$51.30 per share.
AT&T shares -- which have been trading in the mid- to
high-$40s for the past few weeks -- spiked 12 percent Nov. 22, from $46.56 to $52.13, when
a report of the tracking stock was first published. The stock closed at $50.75 per share
Nov. 23. In early trading Nov. 24, AT&T shares were up 5.3 percent to $53.44.
The tracking stock would also help to finance
AT&T's fixed-wireless strategy, dubbed "Project Angel," which is aimed
at bringing local telephone service to areas where AT&T has no deals with local cable
Although AT&T announced a preliminary telephony
agreement with Time Warner Inc. in February -- that deal has yet to be finalized --
signing up other cable operators has proven harder than expected.
AT&T is already testing Project Angel -- which uses
proprietary high-speed digital-processing technology that sends or receives signals
between the customer's home and a wireless base station -- in Dallas, and it expects
to expand to two other cities next year.
Also last week, AT&T began responding to Federal
Communications Commission questions about the MediaOne deal, but it sidestepped some of
the more pointed requests.
The commission asked AT&T to respond to 27 questions,
but the company elected to answer just 11 in a Nov. 22 letter to the agency. AT&T said
it would answer the balance of the questions "as the information becomes
AT&T needs FCC approval to acquire MediaOne, which
serves about 5 million cable subscribers and which has substantial ownership stakes in
Time Warner Entertainment, a limited partnership, and Road Runner, a high-speed
AT&T failed to detail whether Excite@Home Corp. and
Road Runner will merge or compete after the MediaOne deal closes. It also failed to
provide a copy of Excite@Home's 11-month-old video-streaming agreement with
And the FCC received no response when it asked for details
regarding AT&T's open-access plans after an exclusivity agreement with
Excite@Home runs out in 2002.
Nor did the agency receive copies of AT&T's deals
with companies that will provide content and services over advanced set-top boxes or
information about AT&T's plans to cache the Internet content of affiliated or