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CWA: AT&T Strategic Plans May Be Bad News for Investors

The Communications Workers of America is alerting investors of AT&T (NYSE: T) that some of the options that will be considered by the company's board of directors this month to improve stock performance may actually have an adverse effect on AT&T common shareholders.

In a letter to institutional investors, CWA pointed out that one of the restructuring plans under consideration - involving a spin-off or leveraged buyout of AT&T's consumer business led by John Malone, chairman of the Liberty Media Group - has already been appraised by some news accounts as not in the best interests of AT&T stockholders.

"An examination of Malone's track record reveals a consistent pattern of self-dealing at the expense of other shareholders. Malone relies on a combination of tracking stocks and dual class stocks with super-voting rights to serve his own interests before those of other shareholders," CWA wrote.

This record includes a higher premium paid to Malone for his shares of Tele-Communications Inc. (TCI) stock than was paid to other shareholders and Malone's retention of near-complete control over Liberty Media, which may put Liberty and AT&T on a "collision track" and raises real concerns about the conflict of interest between Malone's position at Liberty and his seat on the board of directors of AT&T.

CWA also outlined why any proposed plans to spin off the consumer division is a short-sighted strategy.

"Without consumer services, AT&T will lack the financial resources needed to upgrade its cable properties and service its heightened debt load," CWA said. Not only does AT&T's strategy of bundling local, long-distance and wireless voice and data services require a consumer segment, but its broadband strategy is aimed solely at this consumer segment and requires this base as a point of entry, the union added.

"AT&T needs its consumer division and should stick to its strategy. AT&T shareholders should take a pro-active stance to protect their interests in the event of a transaction involving the sale of key and irreplaceable assets," CWA stressed.



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