Major telecom stocks in US continued their downward trajectory on Tuesday, reeling under the impact of an investigation that revealed that they left behind thousands of lead-coated cables in the ground.
While AT&T shares have plunged to their lowest level since 1993, Verizon shares dropped 7.5 percent to their lowest closing level since 2010.
More Than 2,000 Cables
A Wall Street Journal said earlier that telecom companies AT&T, Verizon Communications, Telephone and Data Systems and Frontier Communications left behind as many as 2,000 lead-containing cables in the country which they had installed under the old Bell System.
After the report was released, analysts downgraded the stocks, resulting in huge sell-off. While AT&T shares lost about 14 since the report was released, Verizon fell 10 percent and Frontier Communications plunged a whopping 33 percent.
AT&T the company is conducting additional testing following the WSJ report. "The scientific literature and reliable studies in the U.S. and abroad give no reason to believe that these cables pose a public health issue or a risk to workers when appropriate safety measures are in place," the company spokesperson told CNN.
Telecom industry trade group USTelecom said it is interacting with the stakeholders. "The U.S. telecom industry prioritizes the health and safety of our communities and workers. We have not seen, nor have regulators identified, evidence that legacy lead-sheathed telecom cables are a leading cause of lead exposure or the cause of a public health issue," the trade group told CNN.
Meanwhile, some lawmakers have already called for detailed investigation into the matter. "This is corporate irresponsibility of the worst kind," said Democratic Sen. Edward Markey, adding that the telecom companies must say how how will address the environmental and health concerns.
"There will be clear financial and reputational risks for telecommunication companies. Akin to the experience of environmental and litigation impacts of historical asbestos and lead paint scenarios on industry participants, this will likely play out over the months and years to follow and mark a credit negative for many in the industry," Neil Mack, vice president for Moody's Investors Service, said Tuesday.
The lead-coated cables were laid by the telecom companies as far back as in the mid-1800s and the process continued into the 1900s as the telecom giants were building the national telephone systems. The Wall Street Journal says in its report that the telecom companies were aware of the environmental hazards.
The report specifically claims that officials at AT&T had said in 2010 that the company was in the know of the issued posed by the tainted cables. At the time, the report says, the company believed it was riskier to try to extract the cables from the ground and water.
AT&T disputed the report and said the Journal's research was flawed. The report conflicts not only with what independent experts and long-standing science have stated about the safety of lead-clad telecom cables but also our own testing, which we have made available to the public and shared with the Journal, the company said.
AT&T added that WSJ relied on "flawed" testing methodologies and that there was a "conflict of interest" in the process as well. "Any new scientific data needs to be studied further before arriving at conclusions about public health and safety related to these cables," the company said.