AT&T stock gained in the wake of a report it's in talks to acquire Lumen Technologies' consumer fiber-optic network business for $5.5 billion. T stock has advanced 20% in 2025 as investors focus on the telecom's "convergence" push — selling landline broadband and wireless services in product bundles.
At Bernstein Research, analyst Laurent Yoon said AT&T would be acquiring fiber optic network assets at a good price.
"We believe this is either a small gift from heaven for AT&T remaining true to its core capabilities, or there is more to the deal than meets the eye," he said in a report.
Bloomberg reported the talks on Monday afternoon. Lumen shares fell 9.5% on Monday as investors reacted to the deal's price tag AT&T climbed 1.3% to 27.31.
On the stock market today, AT&T stock rose 1.5% to 27.73 in afternoon action. Lumen stock fell 5% to 4.17.
Meanwhile, Lumen's consumer broadband network passes 4 million homes.
AT&T plans to expand its own fiber-optic network to 30 million-plus homes and businesses by the end of 2025. At the end of the September 2024 quarter, it had 18.5 million.
In 2023, AT&T and BlackRock, the world's largest asset manager, in 2023 formed a joint venture to expand fiber-optic network services. It's called Gigapower.
At JPMorgan, analyst Sebastiano Petti said in a report: "We believe AT&T's ability to quickly scale penetration and margins justifies the (Lumen) acquisition. It is still unclear the extent to which AT&T may be acquiring copper (home) passings from Lumen and/or if there are any partners involved (including its Gigapower joint venture), but feel comfortable that the deal is largely de-risked at this valuation. "
Verizon's Frontier Fiber Deal
Verizon Communications last year agreed to buy Frontier Communications, the largest pure-play fiber internet provider in the U.S., in an all-cash deal valued at $20 billion. Verizon stock has gained 9% this year.
AT&T has returned to its telecom roots, shedding satellite TV broadcaster DirecTV and WarnerMedia.
Meanwhile, AT&T stock holds an IBD Relative Strength Rating of 94 out of a best-possible 99, according to IBD Stock Checkup.
Shares have been consolidating for a few weeks after breaking out from a base in late January. On March 12, AT&T stock briefly touched its rising 10-week line before paring losses.
AT&T stock gained 36% in 2024.
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