Elliott Management Corporation, an activist investment firm, called for major changes at AT&T on Monday and unveiled a plan that it says could boost the telecommunication company's stock by 65 percent in the coming years. The "value-creation opportunity" was accompanied by a disclosure that Elliott has taken over management of $3.2 billion worth of AT&T stock.

In a letter to the AT&T board, Elliott introduced the improvement plan — called Activating AT&T — and outlined its four-part approach: increased strategic focus, improved operational efficiency, a formal capital allocation framework, and enhanced leadership and oversight. The firm also detailed AT&T's "prolonged and substantial" underperformance, which has left the company "deeply undervalued."

"There is a great deal at stake in ensuring that AT&T realizes its potential – for shareholders, for consumers, for employees, and even for the U.S. as a global telecom leader," read the letter, which was signed by Elliott partner Jesse Cohn and associate portfolio manager Marc Steinberg.

Shares of AT&T ($T) soared in premarket and early trading hours Monday in response to the letter.

AT&T said in a statement that it will "review Elliott Management's perspectives in the context of the company's business strategy" and that it looks forward "to engaging" with the firm.

Elliott took particular issue with AT&T's merger and acquisition endeavors, which have topped over $200 billion in deals in recent years. The firm specifically criticized AT&T's failed bid to buy T-Mobile in 2011, its 2014 purchase of DirecTV, and the acquisition of Time Warner, which was finalized last year following a prolonged legal battle with federal regulators.

"AT&T's [merger and acquisition] strategy has not only contributed directly to its profound share price underperformance, but has also caused distractions that have contributed to the Company's recent operational underperformance," Elliott wrote.

The logos for Time Warner and AT&T on the floor of the New York Stock Exchange. Photo Credit: Richard Drew/AP/Shutterstock

The firm added that AT&T has yet to provide "a clear strategic rationale" for pursuing the Time Warner deal, which created the mass media conglomerate WarnerMedia, and said that strategic benefits should have been apparent by now. This specific critique was lauded by President Trump, who regularly attacks WarnerMedia's most high-profile news network: CNN.

"Great news that an activist investor is now involved with AT&T," Trump said on Twitter. "As the owner of VERY LOW RATINGS CNN, perhaps they will now put a stop to all of the Fake News emanating from its non-credible 'anchors.'"

Elliott also called for AT&T to create a new capital allocation framework that includes firm spending commitments, and to consider divesting from several of its non-core businesses. The offshoots, Elliott said, include DirecTV and AT&T's wireless business in Mexico, which remains unprofitable and has delivered below expectations.

By following its plan, Elliott said that AT&T can achieve a $60 increase in its share price by the end of 2021. "This represents … a rare opportunity for any company, let alone one of the world's largest."

AT&T added in its statement that its board and management team "firmly believe that the focused and successful execution of our strategy is the best path forward to create long-term value for shareholders."

Elliott's letter, moreover, castigated AT&T's "unnecessarily complicated and inefficient" bureaucracy, which is headquartered in Dallas, Texas and is made up of nearly 275,000 employees worldwide. The firm called on AT&T to conduct a third-party review of operations to eliminate waste and redundancy. AT&T said that many Elliott's recommendations are "ones we are already executing today."

The investment firm specifically faulted AT&T's current leadership team for the company's financial and operational issues, and called on the board to hold management accountable.

Ending on a high note, however, Elliott wrote that AT&T is at a "pivotal inflection point in its storied history" and that, fortunately, there is "a path forward."

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