The Zhitong Finance App learned that Citibank analyst Michael Rollins published a research report downgrading AT&T (T.US), Frontier Communications (FYBR.US), and Telephone and Data Systems (TDS.US) ratings to “neutral/high risk,” and lowered the target prices to 16 US dollars, 17 US dollars, and 8 US dollars, respectively. The analyst notes that concerns relating to lead cables are likely to continue “for at least a few months or more” until the market has a better understanding of the financial risks associated with them.

According to information, there were earlier reports that soil rivers in many parts of the United States have been polluted by lead cables, and the content exceeds regulatory safety guidelines. According to estimates by New Street Research analyst Jonathan Chaplin, it may cost the US telecommunications industry 59 billion US dollars to dismantle all lead-containing cables nationwide.

Rollines wrote in the report: “In traditional networks deployed across the country, a significant proportion may use lead shields, and each company's risk exposure is different.” He also added that it is currently impossible to quantify the risk; it may take months to obtain more information, and “years” for a final solution.

Although, the two companies mentioned in the report — Verizon (VZ.US) and AT&T — both responded that the potential lead exposure within their network infrastructure may only be a small portion.

However, Rollins' estimates that AT&T and Verizon's respective networks may have a “significant” proportion affected by lead-sheathed cables. As for Verizon, Rollins' learned that the company's lead-containing cables may account for 20% of its copper network infrastructure.

Regarding AT&T, Rollins said that before considering any potential liabilities associated with lead-sheathed cables, he still expects the company to make progress in terms of cash flow and continue to reduce its debt burden over the next two years.

Regarding Frontier, Rollins said the company “continues to rely” on capital markets to build networks, which could complicate capital costs and affect the speed at which it can upgrade. He also expects the company's net fiber growth rate to slow in the second quarter.

Regarding phone and data systems, the analyst said the company's cable business exposure requires further assessment given its investment in fiber and cable assets, which may be a prominent issue for the unit.