LILAK - AT&T's $2 Billion Asset Sale Could Be a Windfall for This Cable Operator
Telecom and media powerhouse AT&T (NYSE: T) has been under pressure to turn its business around. The company has nearly $158 billion in total debt on its balance sheet and has faced revenue headwinds in its pay-TV business and at DirecTV due to cord-cutters. The company even has an activist investor, Elliott Management, calling for it to sell some assets so it can pay down debt and improve its financial results in its core business.
It's at least in part due to all this pressure that AT&T decided this fall to sell its Puerto Rico and U.S. Virgin Islands business to Liberty Latin America (NASDAQ: LILA)(NASDAQ: LILAK). While AT&T is most likely happy to sell another non-core business -- and use the just under $2 billion it will generate to strengthen its balance sheet -- this deal could be a real winner for the buyer.
Liberty Latin America provides cable and internet services in 18 countries across the Caribbean, as well as in Puerto Rico. Therefore, there was strong strategic logic for it to acquire these AT&T assets based on their geographic overlap. It's picking up a business with 1.1 million mobile subscribers that generates $850 million in revenue and approximately $300 million in EBITDA each year.