Ring the Bell: Macquarie, investors eye US toxic lead investigation
United States telecom giant AT&T has a handful of Australia’s biggest infrastructure and superannuation funds, including Macquarie Group, tearing their hair out this week.
Investors with keen memories will remember Macquarie Infrastructure Partners’ $2.9 billion acquisition of regional telecommunications provider Cincinnati Bell in 2020, ending a bidding war with Brookfield Infrastructure.
The infrastructure house took the NYSE-listed company private in an all-cash transaction alongside global alternative investment manager Ares and $66 billion superannuation fund REST.
Shares in AT&T have fallen to their lowest level since 1993. Victor J. Blue/Bloomberg
Earlier this month, offshore reports surfaced that US telecom companies including AT&T and Verizon had left behind a network of cables covered in toxic lead contaminating soil and water sources. That sent AT&T to a 30-year low of US$13.45 while shares in Verizon and Frontier Communications were also under pressure.
All that has local investors trying to work out to what extent Macquarie Infrastructure Partners and their partners could be exposed to the same issues affecting US telecom via Cincinnati Bell.
“Potential copper lead sheathing liability is unquantifiable at this time, but will be a substantial long-term overhang on AT&T and the industry,” JPMorgan analyst Philip Cusick wrote after downgrading AT&T to neutral and lowering his target price to US$17 from US$22.
The Cincinnati Bell deal saw Macquarie Infrastructure and Real Asset take majority ownership at 61.5 per cent. Ares Management picked up 21.2 per cent and Retail Employees Superannuation Trust 17.3 per cent.
Cincinnati Bell, now trading as Altafiber, delivers communications services to residential and
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