AT&T (NYSE:T) is recovering from a dispute with a government agency threatening to slow the rollout of 5G services. As such, further gains in T stock will be difficult to come by.

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The Federal Aviation Administration (FAA) had raised concerns about interference between the “C-band” frequencies purchased by AT&T at last year’s spectrum auction and the frequencies used by airplanes in airplanes. main airports. The spectrum is between 3.7 and 3.98 GHz.

At the height of the conflict in December, the T share was trading around $ 22 / share. It was due to open nearly $ 26 a share on Jan. 7, after agreements were reached on a six-month delay in commissioning around major airports.

Stock T: Back to Pipes

AT&T and rival Verizon Communications (NYSE:VZ), the other big winner in last year’s 5G spectrum auction, refocused on their wireless business, unwinding content deals made in the previous decade.

At one point, Verizon owned both the former America Online and Yahoo companies, while AT&T ran DirecTv and WarnerMedia. Verizon has sold its online assets to private equity. AT&T has placed its assets under the control of private equity and Discovery (NASDAQ:DISCA) while retaining an interest.

AT&T stock has been hammered since the Discovery deal, dropping from over $ 32 per share to its current level. The deal included a new dividend formula that is expected to reduce the payout by 43% to $ 1.15 per year. This brings the yield down to its current price to around 4.4%. It’s still respectable, but the old dividend of $ 2.08 per share was earning over 8%.

The Apple Core and the Metaverse

Rather than talking about airlines or content, AT&T executives now want to talk about Apple (NASDAQ:AAPL) and the wireless metaverse.

The strategy of tying AT & T’s services to the financing of Apple’s new iPhones is not complicated and works. AT&T gained 1.3 million new subscribers in the fourth quarter, more than 300,000 more than expected. For the full year, the company added 3.2 million postpaid wireless customers. This offsets the slower-than-expected growth of fiber, where its lines crossed 1.7 million new homes but only captured 270,000 new customers.

AT&T also integrates its wireless network with the Microsoft (NASDAQ:MSFT) Azure cloud, while companies like Qualcomm (NASDAQ:QCOM) are working on glasses that support augmented reality (AR) applications.

The wide 5G frequencies would also offer lower latency for gaming applications and higher bandwidth so AT&T could compete for home broadband services against its own fiber. Analysts expect the metaverse market to grow at an annual rate of 41.7% during this decade. But AT&T only sells the pipes through which these services flow.

Debt

New revenue is imperative if AT&T is to offset the cost of debt from its entry into 5G. AT&T spent nearly $ 37 billion on two spectrum auctions and is spending billions more on equipment to expand its services. AT&T had $ 177 billion in debt on its books at the end of September.

The Warner Discovery deal provides both liquidity and debt relief of $ 43 billion, with current shareholders also receiving shares in the new company. European regulators have approved the deal, and US regulators are expected to approve it soon.

The bottom line

The cloud is water under the bridge for AT&T.

Microsoft now operates the AT&T cloud, both for the business and its customers.

All you buy with the T share is its dividend, which will now be calculated as a percentage of cash flow rather than as a fixed quarterly payment. If AT&T has any issues with 5G, whether it’s creating services or selling them, the payment could go down further.

Even if the Metaverse turns out to be as great as it is rumored to be, AT&T shareholders won’t be big winners.

As of the publication date, Dana Blankenhorn held long positions in MSFT and AAPL. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Dana blankenhornhas been a financial journalist since 1978. His latest book isThe Big Bang of Technology: Yesterday, Today and Tomorrow with Moore’s Law, technology essays available on the Amazon Kindle store. Follow him on Twitter at@danablankenhorn.