AT&T Inc. today said that Chief Executive Officer Randall Stephenson will step down and hand over the reins to lieutenant John Stankey, currently the carrier’s chief operating officer.

Stankey will start his first day as CEO on July 1. Stephenson, who has led AT&T for the past 13 years, also holds the role of chairman and will continue in that capacity until January 2021.

AT&T, the largest wireless provider in the U.S., underwent a major transformation under the outgoing CEO’s tenure. The company became an entertainment powerhouse by acquiring Time Warner for $85 billion in 2018 and earlier established a leadership position in the satellite television market through its purchase of DirecTV.

Those two acquisitions may have had a big role in AT&T’s leadership shakeup. Activist investor Elliott Management took a $3.2 billion stake in the carrier last year and called on the company to oust Stephenson. In a letter to the board of directors detailing its reasons for seeking a  new CEO, Elliott charged that AT&T under Stephenson mishandled the acquisition of Time Warner and DirecTV.

The executive’s forthcoming departure from the top post appears to be a win for the hedge fund. But there’s a twist: Elliott reportedly sought to oust his replacement, Chief Operating Officer and incoming CEO John Stankey, as well at one point. Before becoming the COO of the carrier, Stankey headed AT&T’s entertainment business and played a key role in executing the Time Warner deal, which was presumably one of the reasons behind the hedge fund’s reservations. 

Elliott sounded a more positive note today. Partner Jesse Cohn said in a statement that the hedge fund “supports John Stankey as AT&T’s next CEO. We have been engaged with the company throughout the search process, which was a robust one, including a range of highly qualified outside candidates and overseen by independent directors. We look forward to working with John as he begins his term as CEO.”

The changing of the guard at AT&T comes on the heels of rival T-Mobile US Inc. announcing its own leadership reorganization. Longtime executive Mike Sievert became the carrier’s CEO at the start of April, replacing predecessor John Legere as part of a succession plan unveiled a few months earlier. And today, Legere said he’s leaving the board a month earlier than he had planned.

AT&T’s Stankey and T-Mobile’s Sievert will have their work cut out for them in their new roles. The executives will have to lead their respective companies through the coronavirus pandemic while ensuring a smooth shift to 5G, the high-speed wireless standard being rolled out worldwide. AT&T must also navigate a changed landscape in the entertainment sector, where its WarnerGroup business must contend with new challenges such as shuttered cinemas. 

Photo: AT&T