AT&T has sold off its 8.3% stake in Mexican telco America Movil (AMX), as it looks to get regulatory approval for its US$48.5bn takeover of pan-American DTH operator DirecTV.
The Dallas, Texas-based telco said it has received US$5.6bn for its shares,…
AT&T has sold off its 8.3% stake in Mexican telco America Movil (AMX), as it looks to get regulatory approval for its US$48.5bn takeover of pan-American DTH operator DirecTV.
The Dallas, Texas-based telco said it has received US$5.6bn for its shares, which it sold to holding companies owned by AMX’s controlling shareholder Carlos Slim.
AT&T will receive US$4.6bn when the sale closes and the remaining US$1bn within the next 60 days. The US incumbent holds 23.8% of AMX’s voting shares within its 8.3% stake.
AMX’s stock rose more than 5% following the announcement, giving it a market capitalisation of US$72bn.
In a statement the Mexican colossus said: “America Movil recognises the great value that the partnership with AT&T had for both companies for more than 20 years.”
The companies’ relationship goes back to 1990 when Southwestern Bell Corp, AT&T’s predecessor, backed Slim’s privatisation of state monopoly Telefonos de Mexico. In the early days of Slim’s Mexican venture, AT&T’s forerunner sent Randall Stephenson, now CEO of AT&T, on secondment to work with Slim.
DirecTV holds a 41.3% stake in Sky Mexico, although the unit is majority-owned by Grupo Televisa – AMX’s great rival. DirecTV Latin America boasts more than 18 million subscribers. Besides Mexico, it operates in Argentina, the Caribbean, Chile, Colombia, Ecuador, Peru, Puerto Rico, Uruguay and Venezuela under its own brand, and in Brazil through Sky Brasil, where it holds a majority stake.
AT&T previously said DirecTV’s satellite platform’s broad reach in Latin America “remains advantaged when compared with cable and telco in Latin America”.
Latin America has an under-penetrated pay-TV market as only 40% of households subscribe to the service. There is a growing middle class in the region which is DirecTV’s fastest growing customer segment.
Separately, AT&T has raised up to US$2bn by agreeing to sell receivables to a consortium of relationship banks led by Citigroup.
AT&T received US$800m in cash for the sale of US$1.6bn receivables in the form of equipment instalment contracts. The remaining balance will be collected over the remaining term of the equipment instalment contracts. AT&T will report the cash receipt as operating cash, according to an SEC filing.
The proceeds will give it more options to finance the cash portion of the DirecTV deal, along with the AMX disposal and the sale of its fixed-line business in Connecticut triple-play operator Frontier Communications for US$2bn.
Under the merger plan, DirecTV’s investors will receive US$28.50 in cash and US$66.50 in AT&T stock for each of their shares.
The deal needs the approval of the US telecoms and antitrust authorities, a small number of US states, and the Latin American countries DirecTV operates in. The companies do not expect to close the merger until Q2 2015.
