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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

Attempting to reform gig work via co-ops

Illustration: Sarah Grillo/Axios

Ride-hailing service The Drivers Cooperative recently debuted in New York City, claiming that its lack of VC funding would result in better driver pay and lower passenger costs.

Why it matters: TDC’s approach is a direct rebuke to the venture capital-fueled gig economy model.

43 mins ago - World

Conservative cleric Raisi elected Iran's president

Raisi gives a press conference after voting. Photo: Atta Kenare/AFP via Getty

Hardliner Ebrahim Raisi easily won Friday's presidential election in Iran, recording 62% of the vote with more than 90% of ballots counted.

Why it matters: Currently the head of Iran's judiciary, Raisi is a close confidant of Supreme Leader Ali Khamenei and has the support of the Islamic Revolutionary Guard Corps (IRGC). His victory solidifies him as a leading candidate to succeed Khamenei, though Friday's low turnout speaks to the disillusionment of many Iranian voters.

Juneteenth forces U.S. to confront lasting impact of slavery economy

Photo illustration: Sarah Grillo/Axios. Photo: Corbis, Brittany Murray/MediaNews Group/Long Beach Press-Telegram via Getty Images

Juneteenth, a once-obscure commemoration of emancipation of enslaved people in Texas, has transformed into an annual reminder about how slavery robbed Black Americans of generational wealth.

Why it matters: That lack of generational wealth still denies Black families the economic security that many white families take for granted.