Nomura Growth and Income Fund on AT&T Inc.
Thesis
The fund held an overweight position in AT&T during the quarter. Shares declined even though first-quarter earnings beat expectations, indicating that investors focused more heavily on balance-sheet and competitive concerns. Elevated debt following the Lumen acquisition weighed on sentiment, while satellite broadband emerged as a new competitive threat. The commentary therefore presents AT&T as an existing long whose near-term fundamentals are being overshadowed by leverage and industry disruption risks.
“elevated debt levels following the acquisition of Lumen and the emergence of satellite broadband as a new competitive threat”
Key risks
- Elevated debt following the Lumen acquisition.
- Satellite broadband is emerging as a new competitive threat.