What will AT&T do with its DirecTV business in Latin America?

After several back and forth, it was confirmed that AT&T will keep your business DirecTV in Latin America. Regardless of whether its global business is up for sale, if the transaction is successful, Sky’s operations in Brazil and DirecTV in the region, controlled by Vrio, will continue to belong to the company.

This information comes from a report on CNBC. In early October, the New York Times reported that AT&T was continuing its decision to divest from DirecTV, and had even asked for an auction for DTH.

However, until then it was unclear whether AT&T intended to sell DirecTV’s US assets only, or whether the initiative also included operations in Latin America. In addition, also in August, the Wall Street Journal reported the interest of the Apollo Global Management and Platinum Equity investment funds to acquire DirecTV.

According to CNBC, the transaction agreement could include between 30% and 49% of AT & T’s pay-TV operations in the United States. The drives included are DirecTV (DTH); AT&T Now (pay TV via OTT) and U-Verse (IPTV).

CNBC also assured that the deals will last until early December and pointed out, as the Wall Street Journal had done in August, Apollo Management, among other private companies, as a major stakeholder in the acquisition of AT&T’s business, already mentioned.

In Latin America, according to AT & T’s Q3 2020 Quarterly Results report, Vrio had a total of 10.9 million subscribers. The figure represents a total of 229 thousand customers more than the 10.7 million registered at 30 June

No buyer

After we met weeks ago AT&T wanted to sell to DirecTV, but the news is that he apparently would have a hard time finding people interested in the acquisition Vrio, the Latin American division that brings together the satellite television business, according to Bloomberg, citing sources familiar with the matter.

Some of the factors apparently could be the files decreasing results of the unit, added to operator output in Venezuela, it complicates buyers’ efforts to find the right price for the Vrio.

The Vrio problem adds to the major challenges that AT&T faces in its engagement raise money Y pay off debts selling non-essential assets in a difficult market, Bloomberg said.

The context

One of the goals of the new CEO of the US operator, John Stankey, is ruling out non-essential assets that the company added during its era of mega acquisitions.

But also, days ago the Wall Street Journal published that AT&T started conversations with private equity firms to sell their DirecTV business after customer losses in recent years.

The firm and its Goldman Sachs advisors have been in talks with private equity suitors and potential bidders include Apollo Global Management Y Platinum Equitypeople familiar with the matter said.

Competition devoured it

Last year, one of the major shareholders of AT&T, Elliott Management, recommended the group to divest non-essential assets to reduce your debt and re-evaluate.

“Any asset that does not have a clear strategic rationale for joining AT&T should be considered for divestment: DirecTV, Mexican wireless operations, parts of the cable footprint, and all other assets should be evaluated as part of this review.“the fund had suggested, requests received by the company.

In the second quarter of 2020, DirecTV’s revenues in Latin America they decreased by 27% on an annual basis, au $ s 752 millones, while the customers of this unit decreased a 21 percent, year over year, to 10.6 million.

But what’s more, everything indicates that this move would be aimed at compensating for the losses incurred in terms of income, but also the flight of users, only in its most recent financial report, AT&T said that lost 897 thousand subscribers of premium TV (including DirecTV).