AT&T, facing $158 billion debt, to sell Puerto Rico network for $2 billion

An AT&T sign on the outside of a building.
Enlarge / An AT&T signal exterior an organization workplace in New York City.

AT&T has agreed to sell its wi-fi and wireline networks in Puerto Rico and the US Virgin Islands for $1.95 billion to Liberty Latin America. The deal will assist AT&T pay a small portion of the debt load created partially by its acquisitions of DirecTV and Time Warner Inc.

AT&T introduced the deal at the moment, saying that the transaction requires evaluate by the Federal Communications Commission and Department of Justice. AT&T hopes to full the sale inside six to 9 months. “This transaction is a result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization,” AT&T CFO John Stephens stated.

AT&T has stated it intends to lower its debt by up to $20 billion in 2019. The firm already lowered its long-term debt from $166 billion as of December 31, 2018, to $158 billion on June 30, 2019. AT&T advised traders at the moment to anticipate share buybacks later this 12 months as the corporate continues enhancing its debt-to-earnings ratio. AT&T stated it it’s on monitor to hit its objective of a internet debt-to-adjusted EBITDA ratio within the 2.5X vary by year-end, down from its present 2.7X. AT&T’s adjusted EBITDA was $29.8 billion for the primary six months of 2019, a tempo of almost $60 billion for the 12 months.

AT&T beforehand “sold its stake in streaming service Hulu for $1.43 billion and WarnerMedia’s Manhattan offices at Hudson Yards for about $2.2 billion,” a Reuters story stated.

For Liberty, shopping for AT&T’s network in Puerto Rico and the US Virgin Islands will assist it dominate the communications business on the islands. The deal will give Liberty a client cellular network and a fiber backhaul enterprise.

“Liberty is already the biggest pay-TV and broadband provider on the island [of Puerto Rico],” the Wall Street Journal wrote at the moment. “Cable tycoon John Malone, who holds a 25.5% voting stake in Liberty Latin America, and Liberty Latin America CEO Balan Nair have told investors they would like to expand in the region through disciplined mergers and acquisitions.”

The sale from AT&T to Liberty consists of “spectrum; real estate and leases; customers, including 1.1 million wireless subscribers; and contracts,” AT&T stated.

AT&T has operated in Puerto Rico since 2009, when it purchased Centennial Communications Corp. for nearly $1 billion. AT&T stated the sale will not have an effect on the event of FirstNet, a US-wide public-safety network it’s constructing below a contract with the US authorities.

AT&T stated:

Among different companies, post-close Liberty Latin America will help AT&T’s FirstNet construct in Puerto Rico and the US Virgin Islands, increasing LTE protection and capability to finest meet the wants of first responders within the area. Eligible first responders subscribing to AT&T’s FirstNet companies in Puerto Rico and the US Virgin Islands will nonetheless have entry to the advantages and capabilities of the FirstNet network platform, together with precedence and preemption.

Mobile clients transferred from AT&T to Liberty “will continue to benefit from free roaming services between Puerto Rico, the US Virgin Islands, and the mainland United States, Mexico and Canada,” Liberty stated.

AT&T stated it can additionally proceed working DirecTV on the islands.

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