AT&T Could Play The Jobs Card To Trump The Donald's Time Warner Merger Opposition

As shares of Time Warner Inc TWX were trading 12 percent below the AT&T Inc. T takeout price, Wunderlich’s Matthew Harrigan said the fair AT&T stock valuation following the deal is $46, which implies an $113 upside to Time Warner's valuation, inclusive of the $53.75 cash.

He maintains a Buy rating on the company, while raising the price target to the takeout price of $107.50.

The Jobs Card

"Although large mergers can be political decisions as much as black letter law determinations [...] Stephenson held a major card when he met with PEOTUS this week — the likelihood that 5G wireless may provide a major U.S. economic impetus with concomitant job creation — likely overriding any CNN 'fake news' perceptions even if the merger was not discussed," Harrigan began.

An Accenture study commissioned by the Cellular Telephone Industries Association was released on January 13 suggesting that 5G wireless deployments could create 3 million new jobs and add ~$500 billion to the U.S. economy. Given the nature of AT&T's business, most of these jobs would be within the United States, Harrigan stated.

“Given the tone of Trump's recent conversations with CEOs of American industrial companies, we would be surprised if the main thrust of the Trump Tower conversation was not job creation. (We would expect acquiring TWX to have just a tangential impact),” the analyst wrote.