Shares of Verizon Communications Inc. and AT&T Inc. saw an increase on Tuesday, putting an end to their recent losing streaks. The companies’ stock prices had been affected by reports of their past use of lead-sheathed cables.
Verizon’s stock (VZ) rose by 3.7% during Tuesday morning trading, breaking an eight-session losing streak. This was the longest losing streak for Verizon since September 8, 2017. Over the course of the eight sessions, Verizon shares had dropped by 16.1%.
Meanwhile, AT&T’s shares (T) increased by 2.6% in the early session, putting an end to a two-session losing streak. However, AT&T had not recorded any gains in nine sessions, including one day of flat performance. Over those nine sessions, AT&T’s stock had declined by 16.1%.
The wireless companies have faced pressure following a report in the Wall Street Journal regarding their historical use of lead-sheathed cables. Some of these cables are still present underground and in other locations. Concerns have arisen in the financial sector regarding the potential cost of their removal or any other necessary measures.
See more: AT&T’s Stock Slumps to Lowest Level in 30 Years as it Receives Another Downgrade
Legacy Lead-Sheathed Telecom Cables: To Remove or Not to Remove
A new debate has been sparked regarding the fate of legacy lead-sheathed telecom cables. The issue at hand involves the safety of workers handling these cables, potential environmental impact, cable age and composition, geographic location, and customer and business needs. USTelecom, a trade association representing Verizon and AT&T, has shared insights on this matter.
While the costs associated with the removal of these cables remain unclear, analysts believe that this uncertainty may affect AT&T and Verizon shares until further information is available.
Overhang on AT&T and Verizon
According to Evercore ISI’s Vijay Jayant, a clear and prompt resolution seems unlikely to emerge. Consequently, the financial exposure for incumbent local exchange carriers (ILECs) might remain uncertain throughout 2024 or longer. This situation leaves these companies dealing with an overhang that will prove challenging to overcome.
See more: Verizon’s Lead ‘Overhang’ May Limit Dividend Increases, Analyst Says in Downgrade
Telephone & Data Systems Inc. and Frontier Communications Parent Inc. Rally Amidst Concerns
Shares of Telephone & Data Systems Inc. (TDS) and Frontier Communications Parent Inc. (FYBR), two smaller names in the telecommunications industry, have recently experienced a significant sell-off due to concerns surrounding lead-sheathed cables. However, both companies saw a sharp rally on Tuesday.
Telephone & Data Systems Inc., in a late Monday release, announced that it had conducted a thorough assessment of its communications network nationwide and discovered approximately 10 miles of lead-covered cables. The company is now in the process of identifying the necessary measures to address this limited amount of lead cabling within its network.
As a result, shares of Telephone & Data Systems Inc. were up by approximately 10% on Tuesday.
This recent development showcases the proactive approach of Telephone & Data Systems Inc. and its commitment to the safety and efficiency of its network infrastructure. Despite the challenges caused by concerns over lead-sheathed cables, both Telephone & Data Systems Inc. and Frontier Communications Parent Inc. are projecting resilience and demonstrating their ability to adapt.
As the telecommunications industry continues to evolve, it is crucial for companies to prioritize the maintenance and modernization of their infrastructure. Through their actions, Telephone & Data Systems Inc. and Frontier Communications Parent Inc. exemplify the dedication required to navigate the ever-changing landscape of telecommunications successfully.
Investors are closely watching how these two companies address the lead-sheathed cable issue and anticipate future updates on their progress. The recent rally in their respective stock prices reflects market optimism and confidence in their ability to overcome challenges effectively.
Overall, amidst concerns about lead-sheathed cables, both Telephone & Data Systems Inc. and Frontier Communications Parent Inc. have shown resilience and determination, positioning themselves as key players in the telecommunications industry. Their ability to adapt and address issues head-on is commendable and indicative of their commitment to providing reliable and efficient services to their customers.