AT&T and WBD Stocks Both Look Attractive. Here’s Why.

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Barron’s praised AT&T’s Warner Bros. spinoff in a May 2021 cover story. Both stocks are attractive now.

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AT&T has officially closed the book on a tumultuous phase of its nearly 150-year history, with its foray into the media business finally over. On April 8, the company officially spun off Warner Bros. and completed the media group’s subsequent merger with Discovery.

Investors now have a pair of inexpensive stocks to consider: The leaner AT&T (ticker: T), focused on competing in the U.S. wireless and home broadband markets, and the streaming-centered entertainment company

Warner Bros. Discovery (WBD). The two stocks will appeal to different investor bases, and both could be reinvigorated by their independence.

AT&T will be a telecom pure-play once again. That’s a slow-growth, defensive business with high barriers to entry, wide profit margins, and heavy capital expenditure requirements. AT&T is all-in on expanding and improving its 5G wireless and fiberoptic networks to better compete against the other wireless and cable giants. Operating results over the past year have already shown progress on that front: AT&T led the U.S. wireless industry in subscriber growth in 2021 and has entered new fiber markets.

Those infrastructure-intensive ambitions come at a high price. AT&T management expects to spend $24 billion on its networks this year and next, before annual capital expenditures decline toward $20 billion in 2024 and beyond. That investment will go toward new antennas and 5G equipment, miles of fiberoptic cable, and data-center investments. There is an arms race in both…


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