AT&T investors to focus on risk from lead cables, cash flow

investing.com:

By Samrhitha A and David Shepardson

(Reuters) — AT&T (NYSE:T) investors will watch out on Wednesday for comments from top management on the telecom firm's financial and legal liability for the lead-clad cables it abandoned decades ago that may have contaminated soil and water sources across the United States.

The $100-billion company last week said lead-clad cables made up only a «small part of its network» as it sought to allay investor apprehensions.

Still, shares have yet to fully recover from a tumble to a three-decade low following a Wall Street Journal report that several U.S. telecom giants including Verizon (NYSE:VZ) have left behind a network of underground toxic lead cables.

Meanwhile, New York Governor Kathy Hochul has ordered an investigation into the health risks associated with old lead-clad cables.

In a memo to employees dated July 18 and reviewed by Reuters, AT&T boss John Stankey admitted that «speculation around the potential need to manage these cables differently has created uncertainty in the financial markets to the detriment of our company and our shareholders.»

The company said last week it has «previously tested lead-clad cables and continue to believe that they pose no public health risk» and «are conducting additional testing… including locations identified in The Journal's stories.»

The costs for cleaning up the lead-clad cables could «range from near-zero to tens-of-billions of dollars in liability,» analysts at TD Cowen said in a July 16 note.

«We very much expect a long-drawn-out process, self-auditing, and plenty of political squabbling with potential class action lawsuits and attorney general lawsuits.»

At least six brokerages have downgraded the stock since the WSJ report, saying the