March 26, 2023

AT&T Urged To Delay 5G Service Launch over Air Safety Concerns – Report

AT&T (T) has been urged to delay the release of its 5G wireless service slated for January 5. Reuters reports that the U.S. Transportation Secretary Pete Buttigieg and the head of the Federal Aviation Administration (FAA) have asked the company to push back the launch by not more than two weeks. T shares fell 0.73% to close at $24.6 on December 31.

AT&T is a holding company that operates as a telecommunications, media, and technology service company. AT&T’s earnings report for Q4 2021 is scheduled for January 26, 2022.

5G Service Concern

The call for a push back is in response to growing concerns that 5G wireless services pose significant aviation safety concerns. The aviation industry and the FAA are concerned that the 5G service could interfere with sensitive electronics such as radio altimeters, consequently affecting aircraft operations.

Verizon (VZ) is another company that has also been asked to push back the planned launch of its 5G service. AT&T and Verizon have confirmed receiving the letters, insisting they are reviewing them. However, the two have also hit back, accusing the aerospace industry of trying to hold C –Band spectrum deployment “hostage until the wireless industry agrees to cover the costs of upgrading any obsolete altimeters.”

The Transportation Secretary and the FAA administrator Steve Dickson have reiterated that the companies will be allowed to deploy their 5G service with certain exceptions around some airports. A buffer zone is to be established whereby aviation operations are permitted to continue safely as the FAA continues to assess the interference potential.

Stock Rating

Last month, Daiwa analyst Jonathan Kees reiterated a Hold rating on AT&T stock with a $26 price target, implying 5.69% upside potential to current levels. According to the analyst, the stock faces many headwinds going by the debt ratio of 4.4 times with a high degree of network spending ahead.

Consensus among analysts is a Moderate Buy based on 5 Buys, 4 Holds, and 1 Sell. The average AT&T price target of $29.22 implies an 18.78% upside potential to current levels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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