Activist hedge fund manager Elliott Management is making a new $3.2 billion investment in AT&T, saying the company could be valued at more than $60 a share by 2021's end.
AT&T stock jumped nearly 6% to $38.31 in Monday premarket trading.
Elliott sent a letter to AT&T's board saying it should look into divesting assets like DirecTV and its Mexican wireless operations. Elliott said it has identified opportunities for more than $10 billion in savings, but that its plan represents $5 billion in cost cuts.
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While Elliott praised Time Warner as "spectacular", it said AT&T has yet to come up with a "clear and strategic rationale" as to why it needs to own Time Warner. A federal appeals court cleared the $81 billion deal in February.
The investor also suggests separating the CEO and chairman positions at the Dallas company.