Although details on precisely how the breakup is to be handled are still scarce, the company has already begun appointing executives for its planned spinoffs. Wednesday saw the most recent of these announcements, with former Qwest Communications International executive Betsy Bernard named to head the struggling consumer long-distance division.
But outside the corporate citadel, an intensifying campaign against the giant's breakup plans is being waged by a handful of unions and pension funds. Their campaign to persuade investors that the split makes bad economic sense is gaining ground, and earlier this week they turned toward the court in a step that could pose a serious threat to AT&T's ultimate plans.
Analysts say Ma Bell has to do a much better job of settling lingering and potentially dangerous doubts before it goes much further in laying the groundwork for the post-split world.
"AT&T has to figure out how to put investors at ease or at least discredit the concerns enough" to keep most investors onboard, said Meredith Rosenberg, a telecommunications analyst with The Yankee Group. The union's lawsuit "could drum up enough public concern that this could be a speed bump."
AT&T announced the outline of its breakup plans last October, settling on drastic measures to problems with revenues and stock prices that had turned desperate in many analysts' and investors' minds.
Although final details on such issues as branding and debt allocation have yet to come, the company has said it will split its wireless, broadband cable and Internet, and business and consumer telephone operations into separate companies. Each will trade separately, with the business and consumer phone operations trading as separate tracking stocks.
The announcement was greeted with considerable skepticism by much of the analyst community and with wariness among institutional investors. Managers of individual funds, such as those of the city and state of New York, requested personal meetings with the company's management, seeking assurances that the company wasn't focused solely on short-term stock recovery.
The most pressing issue is whether AT&T can successfully change its own rules so that only a majority of its shareholders need to approve changes. Under the company's charter, adopted more than 100 years ago, at least two-thirds of outstanding shareholders must vote for any major structural change.
The company filed its intentions with the federal Securities and Exchange Commission last week to make this a majority vote requirement instead. A vote on this charter change is scheduled for May 23.
But the CWA, the AFL-CIO, and the Amalgamated Bank's LongView Fund, which represents mostly union pension funds, is trying to stop this process.
"No matter what your position on the restructuring, investors are losing a voice if AT&T can change its charter like this," said Candice Johnson, a CWA spokeswoman. AT&T says it needs only a majority vote to change its internal rules; the unions say a two-thirds vote is necessary and are asking the New York Supreme Court to back their position.
This round of skirmishing, while focused on arcane procedural issues, could ultimately have a great deal of an impact on the future of the United States' oldest and largest telephone company. AT&T has 5 million shareholders. Under its current rules, it would need two-thirds of those to vote yes, with anybody not voting counting as a no. That makes it difficult to pass a sweeping change even if it's uncontroversial, the company said.
"We are doing this to get on par with other companies," said spokeswoman June Rochford, noting that most large companies headquartered in New York have long since changed their internal policies to require only a majority shareholder vote even for a drastic change.
The unions' opposition means the breakup vote will be controversial, however. They've already held one conference call with investors and fund managers explaining their opposition. They'll take the message to next week's Council of Institutional Investors meeting in Washington, D.C. A larger public relations effort will follow, Johnson said.
Analysts say the message is somewhat tainted by their own interests. Although the lawsuit has been filed by the unions' investment arms, it is clear that the CWA, at least, has a direct stake in the outcome of the breakup. The split means uncertainty and potential job losses--and in this regard, the employees' worries could be seen as diverging from the narrow bottom-line focus of investors.
For this reason, some analysts say unions aren't the best spearhead for the opposition message, even if it is true that many investors have expressed their anxieties about the prospect of a split-up AT&T remaining as viable as the original.
"I still disagree with the direction AT&T is taking, but I expect this will go through largely as envisioned," said Gartner Dataquest analyst Ken McGee.