AT&T is expected to formally announce the tracking stock, which will include both its mobile and fixed-wireless assets, at a meeting with Wall Street analysts on Dec. 6, the Wall Street Journal reported today.
As previously reported by CNET News.com, analysts said AT&T executives have toyed with the idea of a tracking stock before, originally planning to issue separate shares for its Internet and wireless divisions shortly after the merger with Tele-Communications Incorporated. However, the rapid growth of competing wireless companies like Vodafone AirTouch and Nextel has added pressure for the company to finally take the plunge.
John Heath, a spokesman for AT&T, declined to comment on the reports except to say the company will review some of its plans for the upcoming year at the meeting with analysts in two weeks.
Tracking stocks, which provide a way for the Street to value different parts of a company without actually splitting the company, are becoming increasingly common for companies with diverse business units.
For telecommunications giant AT&T, which has seen its stock perform more weakly in recent days, the decision to issue a tracking stock may boost its languishing shares. The stock value of competitor Sprint's PCS wireless division has quadrupled over the last year and has since beenby another AT&T rival, MCI WorldCom.
To date, AT&T's wireless division has more subscribers than any other wireless company in the United States, with more than 10 million customers. Still, stiff competition lays ahead for the company from the likes of the marriage of Sprint and MCI WorldCom as well as a proposed merger of Vodafone AirTouch and Bell Atlantic, which will ultimately be a larger subscriber base.
In addition, AT&T also may choose to issue a tracking stock for its business-outsourcing unit called AT&T Solutions, the Journal reported, citing people close to the company. The Journal said AT&T president John Zeglis is the leading candidate for the chief executive position of the company to be tracked by the new stock. Analysts have said they estimate assets of that division to be valued at as much as $60 billion.