AT&T (T  ) clarified the lead exposure last night in an analyst call and a series of press releases. The company downplayed any lead poisoning exposure to workers, the environment, and the community, asserting it has maintained a safe working environment for decades.

Oppenheimer analyst Timothy Horan had a Perform rating on AT&T Inc. Horan thinks it is conservative, but less than 10% of its footprint (~200K miles) is lead-sheathed, three-fourths of which are underground conduits that should likely remain in place.

Un-buried cables can be left for long periods when safely sealed up and labeled. The analyst believes a small minority will need to be removed but expect T to give more details on its earnings call next week, sooner than expected.

Horan does not expect the removal cost to exceed $20k per mile. Net net, the exposure looks much smaller than we initially expected, more like $2 billion - $20 billion.

The cables in question were not identified initially as a source of lead exposure in the EPA's 2022 Strategy to Reduce Lead Exposure and Disparities in US Communities.

For now, T will not remove its lead cables around Lake Tahoe and elsewhere to permit further third-party analysis in the interest of public health. It has followed EPA recommendations on handling the material and worker and community safety for half a century.

The sector has already taken a $30 billion hit on this news story. Ultimately, this will take years to litigate and decades to clean up.

Argus analyst Joseph Bonner downgraded AT&T to Hold from Buy due to potential environmental risks associated with lead-clad copper cables.

Wall Street Journal's investigation into the environmental effects of the cables creates uncertainty and additional pressure on AT&T shares.

AT&T signals no dividend increases as it focuses on investments in 5G and fiber broadband networks.

Recent Wall Street Journal articles highlight the risks of lead-sheathed copper cables in the telecom industry. Potential liabilities and public health impact remain uncertain, impacting AT&T's business.

The analyst maintained a long-term earnings growth rate forecast of 3%. He maintained a 2023 adjusted EPS estimate of $2.43 and a 2024 forecast of $2.60.

Estimates imply average growth of about 1% over the next two years.

Price Actions: T shares traded higher by 8.36% at $14.58 on the last check Wednesday.