AT&T sells minority stake to buyout firm TPG Capital, trims debt

In a statement AT&T Inc said, it plans on selling nearly a third of its stake in DirecTV to buyout firm TPG Capital in a deal that values the business at $16.25 billion. Less than 6 years ago it had paid $68 billion for the assets.

The newly created New DirecTV, which includes AT&T TV, DirecTV, and U-verse video services, has $6 billion in debt. After the transaction, it will be jointly run by AT&T and TPG.

The spinoff is strategic for AT&T since it enables it to consolidate its balance sheet while it continues to invest in core areas including streaming service HBOMax, and building out 5G.

“We certainly didn’t expect this outcome when we closed the DirecTV transaction in 2015, but it’s the right decision to move the business forward consistent with the current realities of the market and our strategy,” said AT&T’s CEO John Stankey on a call with analysts.

After becoming CEO in July 2020, Stankey has reviewed the telecom conglomerate’s assets in an attempt to trim the company’s debt pile of $147.5 billion.

In December 2020, it sold animation streaming service Crunchyroll to Sony for $1.18 billion.

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

DirecTV has a subscriber base of 17 million and lost 617,000 subscribers during its latest quarter.

Goldman Sachs was the financial adviser to AT&T, while Credit Suisse and BofA Securities advised TPG.



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