NEW YORK-AT&T Corp. emerged on Groundhog Day from its longstanding ruminations about tracking stocks and, apparently seeing no shadows, registered to take its wireless telecommunications business public in spring.
AT&T may sell up to 19 percent of its wireless division and could raise as much as $10 billion in an IPO that would be one of the largest ever.
The company said it plans to hold a special meeting in March at which shareholders will vote on amendments to its charter to permit creation of the AT&T Wireless Group tracking stock.
AT&T said future filings would provide details that were not part of last week’s preliminary registration with the Securities and Exchange Commission. These include the total number of shares planned, their anticipated price range, the proposed ticker symbol, the intended use of proceeds and members of the underwriting syndicate.
The Feb. 2 registration indicated a share offering of up to $100 million. However, AT&T said it used this figure solely to calculate the initial public offering registration fee.
AT&T Wireless Services Inc., Redmond, Wash., earned about $44 million in net income during the first nine months of 1999. As of Sept. 30, it had approximately 12 million subscribers.
At its meeting with securities analysts in early December, the New York-based parent had announced its intention to proceed in early 2000 with a wireless tracking stock IPO.
“We view the wireless tracker as a very good idea for financial flexibility and to spotlight a strong sum-of-the-parts value,” said Richard Klugman, a telecommunications analyst for Donaldson, Lufkin & Jenrette Securities Corp.
“Of course, the big drawback to the tracking stock is the awkwardness of building a bundled offering when management is held accountable to two separate shareholder bases.”
Klugman said that Michael Armstrong, chairman and chief executive officer of AT&T, told analysts this concern was the most difficult part of the process in reaching a decision to take the wireless business public.
To deal with the issue, AT&T will place particular emphasis on transfer pricing within divisions. This is a tool employed by companies which comprise many entities managed as individual profit centers, each responsible for its own return on invested capital. Each unit engages in arm’s length transactions with the others, as if they were not part of the same company.
