AT&T Stock Downgraded to ‘Sell‘ Amid $249 Billion Debt Load

Shares of AT&T Inc. fell and the stock earned at least one downgrade on Wednesday after a federal judge approved the telecom company’s $85 billion buyout of Time Warner Inc, clearing the path for more deals in a rapidly changing media industry.

The news lifted shares of other telecom and media companies such as Sprint Corp., CBS Corp. and Discovery Inc. by around 4 percent in premarket trading. Time Warner was also up about 5 percent.

“Once technically driven volatility wears off we expect the stock to move higher as closure will likely provide a new investor catalyst including $1.5 billion in anticipated cost synergies,” said Cowen & Co analyst Colby Synesael.

However, at least one analyst raised concerns about the debt AT&T was taking on as part of the deal.

“Time Warner will be a positive for AT&T’s income statement, at least initially. But it will be a negative for the balance sheet,” said research firm Moffett Nathanson’s Craig Moffett, who downgraded the stock to “sell”.

“The new AT&T will carry an astounding $249 billion of debt.”

The approval for the deal, which was opposed by President Donald Trump’s administration, marks a turning point for cable, satellite and wireless carriers all eyeing to buy content companies as a way to add revenue.

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To be sure, AT&T's debt load drew some public criticism.

that AT&T is one of the most indebted companies in the world — about $249 billion in debt. Buying Time Warner will not ease this burden.

"That's a risky proposition," Moffett said.