AT&T Sells Remaining Stake in DIRECTV to TPG

Rhea-AI Summary

AT&T (NYSE:T) has agreed to sell its remaining 70% stake in DIRECTV to TPG, subject to customary closing conditions. This non-contingent transaction marks the complete divestiture of AT&T's interest in DIRECTV. Over the past three years, AT&T has received $19 billion in cash distributions from its initial transaction with TPG and expects an additional $7.6 billion following this agreement.

The sale aligns with AT&T's strategy to focus on being the leading wireless 5G and fiber connectivity company in America. It also aims to strengthen AT&T's balance sheet by accelerating cash inflows. The transaction is expected to close in the second half of 2025.

Positive

• Sale of remaining 70% stake in DIRECTV to TPG
• Expected additional $7.6 billion in cash payments from the sale
• Strengthening of AT&T's balance sheet through accelerated cash inflows
• Alignment with AT&T's strategy to focus on 5G and fiber connectivity

Negative

• Complete divestiture of DIRECTV, potentially reducing future revenue streams

Insights

Financial Analyst

AT&T's sale of its remaining 70% stake in DIRECTV to TPG marks a significant strategic move. The deal, expected to close in H2 2025, will generate $7.6 billion in cash payments, adding to the $19 billion already received from previous distributions. This substantial cash infusion will bolster AT&T's balance sheet, potentially accelerating debt reduction efforts.

The divestment aligns with AT&T's strategy to focus on its core 5G wireless and fiber connectivity businesses, which offer higher growth potential. By exiting the mature satellite TV market, AT&T can reallocate capital and resources to more promising areas. This move could enhance long-term shareholder value by improving the company's financial flexibility and growth prospects.

Investors should note that while this transaction provides immediate financial benefits, it also removes a steady cash flow source from AT&T's portfolio. The impact on future earnings and dividend sustainability will be important to monitor.

Telecom Industry Expert

AT&T's complete exit from DIRECTV signifies a pivotal shift in the telecom landscape. This move underscores the declining relevance of traditional pay-TV in the face of streaming dominance. By divesting DIRECTV, AT&T is strategically positioning itself to compete more effectively in the rapidly evolving 5G and fiber markets.

The focus on wireless 5G and fiber connectivity aligns with industry trends towards high-speed, low-latency networks that support emerging technologies like IoT, edge computing and augmented reality. This strategic pivot could potentially give AT&T a competitive edge against rivals like Verizon and T-Mobile in the race for 5G supremacy.

However, the exit from DIRECTV also means AT&T is relinquishing a significant content distribution platform. The company will need to demonstrate how it plans to leverage its remaining media assets and partnerships to maintain a presence in the content ecosystem, which is important for driving network usage and customer retention.

DALLAS, Sept. 30, 2024 /PRNewswire/ -- AT&T (NYSE:T) ("the Company") reached an agreement to sell its remaining stake in DIRECTV to TPG. Under the agreement, the Company will sell its entire 70% stake in a non-contingent transaction subject only to customary closing conditions.

Over the past three years, the Company achieved financial outcomes consistent with its expectations that underpinned its decision to retain a 70% financial interest in DIRECTV. Reported cash distributions at, and since, the closing of its initial transaction with TPG totaled $19 billion and the Company expects to report an additional $7.6 billion of cash payments following this agreement to sell its remaining stake.

This sale allows AT&T to continue to focus on being the leading wireless 5G and fiber connectivity company in America. This transaction also continues to strengthen AT&T's balance sheet by pulling forward cash expected over the next several years.

The Company expects the transaction to close in the second half of 2025.

For more details on the deal, see the 8-K.

About AT&T  

We help more than 100 million U.S. families, friends and neighbors, plus nearly 2.5 million businesses, connect to greater possibility. From the first phone call 140+ years ago to our 5G wireless and multi-gig internet offerings today, we @ATT innovate to improve lives. For more information about AT&T Inc. (NYSE:T), please visit us at about.att.com. Investors can learn more at investors.att.com.

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SOURCE AT&T

FAQ

What is AT&T (T) selling to TPG?

AT&T (T) is selling its remaining 70% stake in DIRECTV to TPG.

How much cash has AT&T (T) received from its DIRECTV transactions with TPG?

AT&T (T) has received $19 billion in cash distributions from its initial transaction with TPG and expects an additional $7.6 billion from this latest agreement.

When is the AT&T (T) DIRECTV sale to TPG expected to close?

The transaction is expected to close in the second half of 2025.

How does the DIRECTV sale align with AT&T's (T) strategy?

The sale allows AT&T (T) to focus on being the leading wireless 5G and fiber connectivity company in America and strengthens its balance sheet.