Sale of AT&T's large stake
AT&T (T) is in advanced talks with private equity firm TPG to sell a minority stake (largest ownership stake) in its satellite and cable TV companies: DirecTV, AT&T TV Now and U-Verse for about $15 billion, with AT&T retaining some of their stake, CNBC reported, citing unnamed sources.
The deal could reportedly be announced as early as this week.
AT&T has been trying to move away from its satellite and cable TV business for the past few years to focus on developing its HBO Max streaming video services.
If the deal goes through, it would allow AT&T to cut inefficient assets and huge long-term debts, which total almost $176 billion at the end of the fourth quarter.
AT&T acquired DirecTV in 2014 for what analysts criticised as a huge $48.5bn ($67bn including debt). ($67bn including debt). However, both DirecTV's satellite TV services and U-Vers' cable TV services have lost ground in the era of streaming services whose video content can be watched from various devices if the internet is available.
For example, AT&T lost 4.1 million paying users to DirecTV, AT&T TV Now and U-Verse services in 2020. The company has also written off $15.5bn as an asset impairment loss on this business.
AT&T major shareholder hedge fund Elliott Management has previously urged AT&T management to focus on its strategic businesses with high growth prospects and consider selling non-core assets, including DirecTV. Market analysts pointed out that AT&T had previously negotiated the sale of DirecTV with several companies, but the deal did not go through with any of them.
AT&T shares fell sharply in March 2020, after which they failed to recover even halfway, down 23.3% over the past 12 months.