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UPDATE 1-Elliott urges AT&T to sell assets, questions Time Warner deal

Supantha Mukherjee

(Adds details from shareholder letter, background, share jump)

Sept 9 (Reuters) - AT&T Inc shareholder Elliott Management Corp on Monday called for the wireless carrier to sell some of its non-core businesses and cut costs in an effort to return more value to shareholders, sending its shares up 10%.

The hedge fund group, one of the United States best known activist investors, called the telecoms group "deeply undervalued" and questioned last year's $85 billion purchase of Time Warner.

Elliott, which has an interest in AT&T together worth about $3.2 billion, said the company could achieve a value per share of more than $60 by the end of 2021 if it follows the shareholder's plan.

Shares of the company, which closed at $36.25 per share on Friday, rose 10% in trading before the bell.

"Despite nearly 600 days passing between signing and closing (and more than a year passing since), AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner," Elliott said in a letter to the company's board of directors.

"AT&T can unlock significant value by focusing its asset portfolio, improving operational performance, instituting clear capital priorities, and enhancing leadership and oversight."

It listed businesses including home security, DirecTV, regional sports networks, CME, Sky Mexico, Latin American pay TV business (Vrio), Puerto Rican operations and other units as possible sale candidates.

Elliott, which oversees $35 billion in assets, has waged successful campaigns for major change at firms including EBay Inc, software firm SAP and Telecom Italia. It said its investment in AT&T has been its largest ever.

The telecom company should also appoint third-party advisers to evaluate its operations and organizational structure, with a focus on eliminating inefficiency and creating a faster-moving organization, Elliott said.

AT&T, which did not immediately respond to requests for comment, has missed revenue expectations five times in the past eight quarters, according to Refinitiv data.

Elliott said a strategic review will help AT&T to rapidly pay down debt through divestment and increase its financial profile. (Reporting by Vibhuti Sharma and Supantha Mukherjee in Bengaluru; Editing by Shinjini Ganguli and Patrick Graham)