AT&T Sheds Puerto Rican Unit -- WSJ
By Shalini Ramachandran and Drew FitzGerald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 10, 2019).
AT&T Inc. has agreed to sell its Puerto Rican and U.S.
Virgin Islands businesses to Liberty Latin America Ltd. for $1.95
billion in cash, allowing the telecommunications giant to shave its
debt load and move closer to repurchasing shares.
AT&T's operation in Puerto Rico provides cellular, landline
and internet connections. It had 1.1 million wireless subscribers.
As part of the deal, about 1,300 AT&T employees will be
transferred to Liberty Latin America.
The two companies said they expect the deal to close within six
to nine months. The Wall Street Journal earlier Wednesday reported
the companies had agreed to a deal.
Puerto Rico and the U.S. Virgin Islands account for a small
sliver of AT&T's domestic operations, but shedding the unit
will help it work down a large debt load accumulated through its
$80 billion-plus acquisition of Time Warner last year.
The deal signals progress on AT&T's goal of selling noncore
assets, something activist investor Elliott Management Corp., which
recently disclosed a stake in the company, is also pushing.
AT&T has also sold its stake in streaming service Hulu.
On Wednesday, AT&T said the deal brings to more than $11
billion the amount of money it will have raised from asset sales
this year. The company said it expects to return to repurchasing
shares in the fourth quarter, along with debt reduction.
Liberty is already the biggest pay-TV and broadband provider on
the island. 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.
AT&T has been looking to sell the Puerto Rico business for
months and initially sought a valuation closer to $3 billion,
according to people familiar with the matter. Liberty plans to
finance the cash deal in large part by raising debt against the
AT&T originally entered Puerto Rico in 2009 after it
acquired Centennial Communications Corp., a rural telecom company
with a large share of revenue from the island, for under $1
The complexity of the Puerto Rican unit slowed negotiations.
Thousands of residents of the commonwealth spend several months out
of the year on the U.S. mainland, for example, which made difficult
the job of counting subscribers, according to another person
familiar with the matter. The island also was heavily damaged in
2017 by Hurricane Maria.
Liberty Latin America is a publicly traded telecom and cable
provider that operates in Chile, Puerto Rico, the Caribbean and
other countries in Latin America. The company spun out last year
from Liberty Global, the international cable operator headed by Mr.
Malone. The Latin America operator currently has a market value of
about $3 billion.
Write to Shalini Ramachandran at firstname.lastname@example.org
and Drew FitzGerald at email@example.com
(END) Dow Jones Newswires
October 10, 2019 02:47 ET (06:47 GMT)
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