AT&T Should Listen to Its New Activist Shareholder

Wireless giant AT&T (NYSE: T) has made some questionable moves in the past few years. It paid $67 billion for DirecTV in 2015, and it doled out another $85 billion in 2018 for Time Warner, all in an attempt to transform itself into a media conglomerate. The company now owns some top-notch media assets, but its strategy, especially around streaming, is an incoherent mess.

These acquisitions have dialed up the risk for AT&T, since they've loaded up the balance sheet with a scary amount of debt. Total debt was roughly $170 billion at the end of the second quarter, not counting another $21 billion in pension obligations. That's the most debt for any nonfinancial and non-government-owned company in the world, according to Bloomberg.

Investors haven't really bought into the story AT&T is trying to tell. The stock trades below its multiyear high, and it goes for just 10 times the company's guidance for full-year free cash flow. That's a big discount to the broader market, but it reflects legitimate concerns about debt and strategy.

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Source Fool.com