AT&T Inc. (NYSE:T) shares tumbled 5.13% on Tuesday, closing at $20.70 after hitting a fresh 52-week low of $20.57. The sharp decline erased approximately $7.8 billion in market capitalization, based on the day's price drop and outstanding shares of 6.95 billion. Trading volume surged to 128.67 million shares, representing 296% of the 65-day average, signaling intense investor reaction.
Spectrum deal uncertainty and Dish bankruptcy
The selloff was triggered by EchoStar Corp.'s (NASDAQ:ECHO) announcement that its Dish DBS unit and wireless arms filed for Chapter 11 bankruptcy in Houston. The filing came after Dish faced a $2 billion debt maturity on 7.75% senior secured notes due July 1, which it could not meet due to delays in a $23 billion spectrum sale to AT&T. Over 88% of Dish's creditors, including $8.8 billion of Dish Wireless debt holders, supported the bankruptcy plan.
EchoStar co-founder and chairman Charlie Ergen stated, "We are operating as usual throughout this process, delivering the same high-quality services that our customers expect." The bankruptcy casts a shadow over AT&T's planned acquisition of approximately 30 MHz of nationwide 3.45 GHz spectrum and 20 MHz of 600 MHz airwaves, which AT&T CEO John Stankey said would "bolster and expand our spectrum portfolio." The deal, valued at $23 billion in cash, is expected to close in mid-2026 pending regulatory approval.
Market impact and peer performance
The broader telecom sector also felt pressure. Verizon Communications Inc. (NYSE:VZ) fell 4.06% to $42.34, while T-Mobile US Inc. (NASDAQ:TMUS) declined 3.63% to $167.73. In contrast, the S&P 500 Index (INDEXSP:.INX) rose 0.79% to 7,499.36, highlighting the sector-specific nature of the selloff.
Adding to the headwinds, reports emerged that SpaceX (NASDAQ:SPCX) and Charter Communications Inc. (NASDAQ:CHTR) have discussed a potential entry into U.S. consumer mobile services. Oppenheimer analyst Timothy Horan warned that "SpaceX will disrupt the $1.6 trillion communications industry," putting further pressure on legacy telecom stocks.
AT&T's financial outlook and dividend
Despite the turmoil, AT&T maintained its dividend. The board declared a quarterly payout of $0.2775 per share, payable Aug. 3 to shareholders of record as of July 10, yielding 5.36% based on Tuesday's close. The company also announced an expansion of its Build-A-Plan offer on July 7, allowing customers to customize wireless plans and bundle them with AT&T Fiber or Internet Air starting at $70 per month.
Investors are now focused on AT&T's second-quarter earnings call, scheduled for July 22 at 8:30 a.m. ET. The stock has declined 28.60% over the past three months and 15.99% in the last month, reflecting mounting concerns over the spectrum deal, the Dish bankruptcy, and competitive threats from satellite-based mobile services.
