Categories Analysis, Earnings, Technology

What happens after the AT&T – Time Warner judgement on June 12

The D-Day is almost here: the verdict on the AT&T-Time Warner merger is set to come on June 12. Speculations are running rife with regards to both the win and lose scenarios. Let’s take a look at what to expect from the big change.

Apart from the rise in interest rates and spike in cord-cutting trends, AT&T’s performance has been impacted by uncertainty over the merger with Time Warner (TWX). The merger will be a massive one and if approved, would lead to a slew of other mergers between various players in the telecom, media and even technology industries.

For those who are unaware of the background, the US Department of Justice had filed a lawsuit against the deal due to concerns over how much power the combined entity would hold. Although many are optimistic about the deal’s approval, there are some who believe it can go either way. It is also believed that the final decision on June 12 will come with conditions attached.

If approved, the AT&T-Time Warner merger might lead to a slew of other mergers in the telecom, media and even technology industries

In the event the merger is approved, the stock is likely to gain nicely. However, depending on the stipulated conditions, if any, one can expect some uncertainty related to the stock movement. The deal will also open fresh revenue streams for AT&T and provide opportunities for expansion and diversification. The approval of the deal would make Comcast very happy as it is eagerly waiting for the outcome to make a bold move for Fox.

In case the deal does not make it through, AT&T will still be just fine. The $500-million breakup fee is rather insignificant and the company could do without the additional debt load. AT&T is strong enough on its own in terms of assets and services and the arrival of 5G will make it stronger. The telecom giant can use the money to invest in its own business or in other smaller acquisitions.

There are also chances of appeals by the concerned losing parties, which would once more delay the merger or perhaps change its course. Also, this proposed union never won the heart of President Trump who spoke against it from the very beginning. It is likely he might have something to say again.

Several analyst firms have rated the stock at Hold and Buy. Even though the growth rate is slow, the stock appears to entail stable dividend payments and looking at the opportunities on the horizon, the situation appears to be rather favorable for AT&T.

AT&T has a market value of $207 billion with more than 140 million mobile subscribers. The company’s dividend yield currently stands at over 6%, which is a strong point in its favor. Looking at the stock trend, AT&T has dropped around 5% from where it was two months ago. Since then it has gained around 3% over the past one month and has been inching its way upwards. The stock closed Thursday’s trading hours up 1.26% at $33.81.

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