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AT&T, dealing with $158 billion debt, to promote Puerto Rico community for $2 billion

Enlarge / An AT&T signal outdoors an organization workplace in New York Metropolis.

AT&T has agreed to promote 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 partly by its acquisitions of DirecTV and Time Warner Inc.
AT&T introduced the deal as we speak, saying that the transaction requires evaluate by the Federal Communications Fee and Division of Justice. AT&T hopes to finish the sale inside six to 9 months. “This transaction is a results of our ongoing strategic evaluate of our stability sheet and belongings to establish alternatives for monetization,” AT&T CFO John Stephens mentioned.
AT&T has mentioned it intends to chop its debt by as much as $20 billion in 2019. The corporate already lowered its long-term debt from $166 billion as of December 31, 2018 to $158 billion on June 30, 2019. AT&T instructed buyers as we speak to anticipate share buybacks later this yr as the corporate continues bettering its debt-to-earnings ratio. AT&T mentioned it’s on monitor to hit its aim of a internet debt-to-adjusted EBITDA ratio within the 2.5X vary by yr finish, down from its present 2.7X. AT&T’s adjusted EBITDA was $29.eight billion for the primary six months of 2019, a tempo of practically $60 billion for the yr.
AT&T beforehand “offered its stake in streaming service Hulu for $1.43 billion and WarnerMedia’s Manhattan places of work at Hudson Yards for about $2.2 billion,” a Reuters story mentioned.
For Liberty, shopping for AT&T’s community in Puerto Rico and the US Virgin Islands will assist it dominate the communications trade on the islands. The deal will give Liberty a client cellular community and a fiber backhaul enterprise.
“Liberty is already the largest pay-TV and broadband supplier on the island [of Puerto Rico],” the Wall Road Journal wrote as we speak. “Cable tycoon John Malone, who holds a 25.5% voting stake in Liberty Latin America, and Liberty Latin America CEO Balan Nair have instructed buyers they wish to develop within the area by way of disciplined mergers and acquisitions.”
The sale from AT&T to Liberty contains “spectrum; actual property and leases; clients, together with 1.1 million wi-fi subscribers; and contracts,” AT&T mentioned.
AT&T has operated in Puerto Rico since 2009, when it purchased Centennial Communications Corp. for nearly $1 billion. AT&T mentioned the sale will not have an effect on the event of FirstNet, a US-wide public-safety community it’s constructing below a contract with the US authorities.
AT&T mentioned:
Amongst different companies, post-close Liberty Latin America will assist 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 community platform, together with precedence and preemption.
Cell clients transferred from AT&T to Liberty “will proceed to profit from free roaming companies between Puerto Rico, the US Virgin Islands, and the mainland United States, Mexico and Canada,” Liberty mentioned.
AT&T mentioned it would additionally proceed working DirecTV on the islands.