AT&T (NYSE: T) is looking to sell some of its DIRECTV, AT&T Now and U-Verse pay-TV businesses, according to a report released by CNBC today. The report states that the telecom giant is considering selling 30% to 49% of these businesses and listing Apollo Management and other private equity firms as potential buyers.
The deal will reportedly cost DIRECTV under $ 15 billion after calculating the entity’s debt. Final bids from potential buyers are expected to be due next month, according to CNBC’s anonymous source.
AT & T’s pay-TV businesses are hurting amid a downtrend, and a number of institutional investors and analysts have urged company to divest DIRECTV to help pay off debt. Combined subscribers for DIRECTV and U-Verse dropped 16% year-on-year in the third quarter, down to about 17 million. Meanwhile, the number of subscribers in the third quarter of AT&T Now reached 683,000, down sharply about 40% compared to the same period last year. The telecom company ended September with debt of about $ 149 billion, down more than $ 30 billion in the past few years.
AT&T bought DIRECTV for $ 67 billion in debt in 2015. While the unit continues to generate strong free cash flow, subscriber loss has grown rapidly and there seems to be little opportunity to operate. business growth back. The removal of significant minority stakes in DIRECTV, U-Verse and AT&T Now could allow the company to settle another significant portion of its debt burden.
It could also put the company in a better position to actively push the growth of its subscription streaming service HBO Max, though that platform is off to a sluggish start as well.