(Bloomberg) – Shares of AT&T Inc. hit a nearly three-decade low on Friday amid growing concerns about the potentially high costs the phone giant faces if it has to clean up contamination from wiring covered in lead in parts of its national network.
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The problem was exposed earlier this week in a Wall Street Journal article that pointed to the leaching of lead cables that were part of the first landline telephone networks built by telephone companies in the first half of the 20th century. These networks are now owned by several national carriers, including AT&T, Verizon Communications Inc. and Lumen Technologies Inc.
AT&T shares fell 4.1% to $14.50 at the close in New York, their lowest price since February 1994. Verizon was down 1.8% and Lumen was down 10%.
Industry analysts have tried to calculate the potential costs and risks that carriers may face.
With a service area that covers about 40% of U.S. homes and an extensive long-distance network, “AT&T will have the greatest exposure,” JPMorgan analyst Phil Cusick wrote in a note Friday. Citing uncertainty surrounding the outcome, Cusick cut his AT&T target price to $17 from $22.
Lead concerns add to an already difficult year for America’s largest telephone company. In April, AT&T reported free cash flow of $1 billion, missing analysts’ $3 billion target and setting off alarm bells for the second straight year over dividend payments. Last month, the company warned that wireless subscriber growth was lower than expected. The company also awkwardly hid a massive restructuring and job-cutting effort behind a new back-to-work policy.
AT&T declined to comment. The company referred questions about the lead situation to USTelecom, an industry group, which created a website with several statements, including a claim disputing the charge that telephone cables are a major cause of lead exposure. The group, which represents most US telephone companies, says it is “ready to engage constructively on the issue”.
(Updates with the closing price in the third paragraph.)
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