AT&T Inc. (NYSE:T) shares fell 5.2% to $20.70 in early New York trading on Wednesday, wiping out roughly $7.9 billion in market value. The decline comes as Dish DBS filed for Chapter 11 bankruptcy after AT&T's delayed spectrum sale left it unable to pay a $2 billion debt due July 1.
The broader telecom sector took a hit, with Verizon (NYSE:VZ) dropping 4.1% and T-Mobile US (NASDAQ:TMUS) slipping 3.6%. Combined, the three stocks lost approximately $22.4 billion in premarket equity value, nearly matching the $23 billion price tag of AT&T's spectrum acquisition from EchoStar (NASDAQ:ECHO).
Dish DBS Bankruptcy and Spectrum Delay
Dish DBS and its wireless units filed for Chapter 11 protection in the Southern District of Texas after a surprise delay in selling spectrum licenses to AT&T left the company unable to repay $2 billion of 7.75% senior secured notes due July 1. EchoStar co-founder and Chairman Charlie Ergen said the company is "operating as usual throughout this process," and noted that Dish TV, Sling TV, Boost Mobile, and Gen Mobile are not expected to be affected by the bankruptcy cases.
AT&T's Spectrum Purchase and FCC Conditions
AT&T is buying 30 MHz of 3.45 GHz mid-band and 20 MHz of 600 MHz low-band spectrum from EchoStar for about $23 billion in cash, covering over 400 U.S. markets. The FCC cleared the sale in May but required AT&T to deploy its network much faster than originally planned, with a focus on rural and underserved areas. AT&T said the new mid-band licenses fit within its capital spending plan.
Market Context and Competitive Pressures
The sector-wide selloff was amplified by reports that SpaceX (NASDAQ:SPCX) and Charter Communications (NASDAQ:CHTR) are in talks about a U.S. mobile phone service. SpaceX already has a direct-to-cell service with T-Mobile. The potential new competition adds to concerns about pricing pressures and market share in the wireless industry.
Futures were lower, with Dow e-minis down 0.27%, S&P 500 e-minis slipping 0.19%, and Nasdaq 100 e-minis losing 0.5% at 8:18 a.m. ET. "The mood is sanguine, but not complacent," said Benjamin Jones, global head of research at Invesco.
Dividend and Financial Outlook
Despite the stock decline, AT&T's board raised its quarterly common dividend to 27.75 cents per share on June 24, payable Aug. 3 to holders of record July 10. At the current price, the annual dividend of $1.11 yields 5.4%, up from about 5.1% at Tuesday's close.
AT&T reaffirmed its 2026 free-cash-flow target of over $18 billion in April, with plans for about $8 billion in share buybacks. The company expects net debt-to-adjusted EBITDA to return to 2.5 times approximately three years after closing the EchoStar deal.
CEO John Stankey has emphasized the company's strategy of offering "fiber and 5G all from one provider," with the EchoStar spectrum adding low-band and mid-band options to support bundled wireless and home internet services. AT&T is scheduled to report second-quarter earnings before the market opens on July 22, with a conference call at 8:30 a.m. ET.
