Illustration: Sarah Grillo/Axios

Activist investor Elliott Management this morning disclosed a $3.2 billion stake in AT&T, making it the telecom giant's 6th largest shareholder.

Why it matters: This is a boomerang on AT&T CEO Randall Stephenson's argument to regulators when buying Time Warner, that his company is now competing with tech giants like Amazon and Netflix. Elliott agrees, which is why it doesn't think a veteran telecom guy like Stephenson should still be in charge.

Elliott believes that AT&T shares have underperformed for the past decade and pins much of the blame on its strategy of building a conglomerate in an age of vertical focus. This includes criticism of its deals for:

  • T-Mobile: "The most damaging deal was the one not done," because the record breakup fee gave T-Mobile the capital to become a viable competitor.
  • DirecTV, which Elliott believes is a business in secular decline. This might be one AT&T already agrees with, as we've been hearing divestiture rumblings (perhaps reflected by AT&T switching the name of its skinny bundle from DirecTV Now to AT&T Now).
  • Time Warner, which Elliott calls a "spectacular company" that AT&T hasn't given a "clear strategic rationale" for owning.

Sources close to the situation say that Elliott began seriously digging into AT&T about a year ago, which also was around the time a judge allowed the Time Warner merger to go through. The hedge fund does believe there are divestiture opportunities, but, again, this is more about wanting management changes.

  • AT&T recently promoted John Stankey to its No. 2 role and heir apparent to Stephenson, but he's another executive with telco roots.
  • Elliott wants someone with a Silicon Valley pedigree — figuratively, not geographically — and doesn't make today's move if it hasn't already talked to a few possible candidates.

What they're saying: AT&T issued a statement on the news ...

"Our management team and Board of Directors maintain a regular and open dialogue with shareholders and will review Elliott Management’s perspectives in the context of the company’s business strategy. We look forward to engaging with Elliott. Indeed, many of the actions outlined are ones we are already executing today."

Go deeper: Activist investors are poaching opportunities from private equity

Editor's note: This story has been updated to include additional information and analysis.

Go deeper

Updated 57 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Politics: Senate Democrats block vote on McConnell's targeted COVID relief bill McConnell urges White House not to strike stimulus deal before election.
  2. Economy: Why the stimulus delay isn't a crisis (yet).
  3. Health: New York reports most COVID cases since MayStudies show drop in coronavirus death rate — The next wave is gaining steam.
  4. Education: Schools haven't become hotspots — San Francisco public schools likely won't reopen before the end of the year.
  5. World: Spain becomes first nation in Western Europe to exceed 1 million cases.
2 hours ago - Podcasts

House antitrust chair talks USA vs. Google

The Justice Department filed a 63-page antitrust lawsuit against Google related to the tech giant's search and advertising business. This comes just weeks after the House subcommittee on antitrust issued its own scathing report on Google and other Big Tech companies, arguing they've become digital monopolies.

Axios Re:Cap talks with Rep. David Cicilline (D-R.I.), chair of the subcommittee on antitrust, about Google, the DOJ's lawsuit and Congress' next move.

2 hours ago - Economy & Business

Boeing research shows disinfectants kill virus on airplanes

Electrostatic spraying of disinfectant. Photo: Delta Air Lines

Boeing and researchers at the University of Arizona say their experiment with a live virus on an unoccupied airplane proves that the cleaning methods currently used by airlines are effective in destroying the virus that causes COVID-19.

Why it matters: Deep cleaning aircraft between flights is one of many tactics the airline industry is using to try to restore public confidence in flying during the pandemic. The researchers say their study proves there is virtually no risk of transmission from touching objects including armrests, tray tables, overhead bins or lavatory handles on a plane.