The company has seen its overall share price languish while competitors such MCI WorldCom have soared over the last year. AT&T has been hampered by investors' cautious attitude toward the company's $110 billion string of cable network buys.
Executives have toyed with the idea of a tracking stock before, originally planning to issue separate shares for AT&T's Internet and wireless divisions shortly after the merger with Tele-Communications Incorporated. But the rapid growth of competing wireless companies like Vodafone AirTouch and Nextel may finally persuade the company to take the plunge, analysts say.
"This could shift the discussion from execution risk in cable to AT&T Wireless, a business in which the company is knocking the cover off the ball," wrote Paine Webber analyst Eric Strumingher in a research report released today. "We expect this card to be played soon."
AT&T could announce the move at an analyst meeting Dec. 6, Strumingher wrote.
Tracking stocks, which provide a way for Wall Street to value different parts of a company without actually splitting the company, are becoming increasingly common for companies with diverse assets--like many telecommunications firms.
The share value of Sprint's PCS wireless division has quadrupled over the last year, giving that company critical funding to build out its new network. Excite@Home--a company in which AT&T is the majority shareholder--announced today that it plans to split its media assets into a separate tracking stock.
The appeal of wireless has been highlighted by recent deals in the United States and abroad. Britain's Vodafone AirTouch is in the middle of a $137 billion bidding war for Germany's Mannesmann, trying to expand its European mobile footprint. The growth prospect for Sprint's PCS division was a major selling point for MCI WorldCom in its bid to buy the long distance firm.
Separately, shares in wireless firm Nextel--the last remaining independent mobile phone company with a nationwide footprint--have soared to nearly 500 percent since the first of the year as demand for wireless services grow.
AT&T's wireless division has more subscribers than any other wireless company in the United States, though the proposed merger of Vodafone AirTouch and Bell Atlantic mobile phone operations will ultimately be larger. Its Digital One Rate plan, which charges the same rate for local and long distance calls, has proven popular and sparked similar plans among its competitors.