Spinoff will lift AT&T

Article Excerpt

AT&T INC. $30 is a buy. The company (New York symbol T; Utilities sector; Shares outstanding: 7.1 billion; Market cap: $213.0 billion; Dividend yield: 6.9%; Takeover Target Rating: Medium; www.att.com) is now merging its WarnerMedia business with Discovery Inc. (Nasdaq symbol DISCA). The new firm will be one of the world’s largest media firms with over 100 cable TV channels including HBO, CNN, TLC, TNT, TBS, Cartoon Network, Discovery, HGTV and Food Network. Under the terms of the deal, AT&T will hand out shares in the new, publicly traded media firm to its own investors as a tax-free distribution. As a group, they will own 71%, while Discovery shareholders will hold the remaining 29%. The two firms expect to complete the transaction in mid-2022. The split will let AT&T better focus on its main telecom businesses, particularly as it upgrades its wireless and fibre-optic networks to handle ultrafast 5G technology. As a smaller firm, AT&T expects to cut its annual dividend rate…