In a move that was widely anticipated by Wall Street, AT&T has just decided to cut its dividend to $1.1/share and spin-off its Warner Media subsidiary, which will be merged with AT&T's partner, Discovery.

Despite being widely expected - the company was trading at a ridiculously high dividend yield north of 8.2% - the decision sent AT&T shares sliding 2% in premarket.

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Wall Street analysts generally see AT&T as a 'buy', although some have lowered their long-term price targets in recent weeks. AT&T reported earnings and sales that generally surpassed expectations for the quarter just last week.

CEO John Stankey said last week during the earnings call that he was unsure about whether to spin off Warner Media (which owns premium TV/streaming hitmaker HBO). But apparently, he has changed his mind as the blandishments of the 100% cash deal valued at $43 billion were simply too tempting to ignore - especially as the telco fights with Verizon for dominance in 5G, which is a capital intensive endeavor. The deal is the latest step by Stankey to unwind the expansionist legacy of his predecessor.

The firm's decision to cut its dividend will also help it retain more of its money, which can be repurposed toward CapEx and growth.