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CWA Forum Lets Investors Assess AT&T Breakup
More than 150 major institutional investors and shareholders of AT&T joined a conference call sponsored by the CWA and the AFL-CIO's Capital Stewardship Program to hear experts discuss the serious concerns surrounding the proposed breakup of the company.
The conference call was part of CWA's action plan to spotlight the serious repercussions the breakup would have on long term investors, consumers and workers.
CWA members are mobilizing against the proposed breakup of AT&T and will be taking that message through public forums, informational leafleting and other actions to customers and the public over the next few months, and to shareholders at the scheduled May 23 annual meeting. AT&T wants to break off wireless and broadband companies and create separate stocks for business and consumer operations.
Participants represented banks, public employee retirement funds, asset managers, analysts and joint union-management pension funds. As a group, they hold 20 percent, or 680 million of the outstanding shares of AT&T stock.
They heard from CWA Vice President Ralph Maly, who stressed that as long term investors, union workers and CWA have a huge stake in the future of AT&T. "We want the company to succeed and be profitable, but AT&T is not implementing a business strategy that will enable it to succeed," he said. Maly cited the company's failure to deliver on the bundled services that customers want - "bungling on bundling" - as just one example of AT&T's poor management.
CWA and the AFL-CIO are urging shareholders to reject AT&T's ill-conceived restructuring plan, and to oppose the establishment of broadband and consumer tracking stocks, a measure that will be acted on by shareholders sometime this summer.
CWA and the AFL-CIO also are seeking support for a shareholder proposal calling for separation of the chairman and chief executive officer position, and are urging shareholders to demand that the board of directors step up its involvement in company operations and refocus attention on a long term strategy that will reinforce shareholder value.
During the call, Michael Garland of the AFL-CIO Office of Investment called the proposed breakup "a costly, two-year diversion from the real problems AT&T confronts, one that will destroy shareholder value."
"AT&T should be using its competitive advantage and unique strengths to create value," Garland said. Those strengths include a diversified portfolio of telecom services, a huge consumer and business customer base, a leading reputation for quality and reliability, an experienced workforce and a dominant brand name, he said.
CWA and the AFL-CIO have stressed that AT&T is failing to confront key strategic challenges, such as its poor execution of bundling strategy, loss of major customers in business and services, troubled integration of expensive cable acquisition and high turnover in staff, including both corporate and technical employees.
AT&T's initial bundling strategy was designed to capitalize on these advantages, and a January 2000 survey by the Strategis Group showed that 66 percent of business customers and 63 percent of residential customers want bundled services, Garland noted. Further, leading telecom competitors provide such bundled services, but AT&T has been unable to implement bundling, failing to integrate sales and services and other systems, he said.
Joseph Van Eaton, an attorney who represents cities in cable licensing matters, told participants that the road to spinoff for AT&T may not be a smooth one, he said many local governments require local approval of any spinoff as part of the franchise agreement and will raise concerns about customer service, franchise fees and other issues.
The conference call was part of CWA's action plan to spotlight the serious repercussions the breakup would have on long term investors, consumers and workers.
CWA members are mobilizing against the proposed breakup of AT&T and will be taking that message through public forums, informational leafleting and other actions to customers and the public over the next few months, and to shareholders at the scheduled May 23 annual meeting. AT&T wants to break off wireless and broadband companies and create separate stocks for business and consumer operations.
Participants represented banks, public employee retirement funds, asset managers, analysts and joint union-management pension funds. As a group, they hold 20 percent, or 680 million of the outstanding shares of AT&T stock.
They heard from CWA Vice President Ralph Maly, who stressed that as long term investors, union workers and CWA have a huge stake in the future of AT&T. "We want the company to succeed and be profitable, but AT&T is not implementing a business strategy that will enable it to succeed," he said. Maly cited the company's failure to deliver on the bundled services that customers want - "bungling on bundling" - as just one example of AT&T's poor management.
CWA and the AFL-CIO are urging shareholders to reject AT&T's ill-conceived restructuring plan, and to oppose the establishment of broadband and consumer tracking stocks, a measure that will be acted on by shareholders sometime this summer.
CWA and the AFL-CIO also are seeking support for a shareholder proposal calling for separation of the chairman and chief executive officer position, and are urging shareholders to demand that the board of directors step up its involvement in company operations and refocus attention on a long term strategy that will reinforce shareholder value.
During the call, Michael Garland of the AFL-CIO Office of Investment called the proposed breakup "a costly, two-year diversion from the real problems AT&T confronts, one that will destroy shareholder value."
"AT&T should be using its competitive advantage and unique strengths to create value," Garland said. Those strengths include a diversified portfolio of telecom services, a huge consumer and business customer base, a leading reputation for quality and reliability, an experienced workforce and a dominant brand name, he said.
CWA and the AFL-CIO have stressed that AT&T is failing to confront key strategic challenges, such as its poor execution of bundling strategy, loss of major customers in business and services, troubled integration of expensive cable acquisition and high turnover in staff, including both corporate and technical employees.
AT&T's initial bundling strategy was designed to capitalize on these advantages, and a January 2000 survey by the Strategis Group showed that 66 percent of business customers and 63 percent of residential customers want bundled services, Garland noted. Further, leading telecom competitors provide such bundled services, but AT&T has been unable to implement bundling, failing to integrate sales and services and other systems, he said.
Joseph Van Eaton, an attorney who represents cities in cable licensing matters, told participants that the road to spinoff for AT&T may not be a smooth one, he said many local governments require local approval of any spinoff as part of the franchise agreement and will raise concerns about customer service, franchise fees and other issues.