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MarketScreener Homepage  >  Equities  >  Nyse  >  AT&T    T

AT&T

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AT&T Sheds Puerto Rican Unit -- WSJ

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10/10/2019 | 02:48am EDT

By Shalini Ramachandran and Drew FitzGerald

AT&T Inc. has agreed to sell its Puerto Rican and U.S. Virgin Islands businesses to Liberty Latin America Ltd. for $1.95 billion in cash, allowing the telecommunications giant to shave its debt load and move closer to repurchasing shares.

AT&T's operation in Puerto Rico provides cellular, landline and internet connections. It had 1.1 million wireless subscribers. As part of the deal, about 1,300 AT&T employees will be transferred to Liberty Latin America.

The two companies said they expect the deal to close within six to nine months. The Wall Street Journal earlier Wednesday reported the companies had agreed to a deal.

Puerto Rico and the U.S. Virgin Islands account for a small sliver of AT&T's domestic operations, but shedding the unit will help it work down a large debt load accumulated through its $80 billion-plus acquisition of Time Warner last year.

The deal signals progress on AT&T's goal of selling noncore assets, something activist investor Elliott Management Corp., which recently disclosed a stake in the company, is also pushing. AT&T has also sold its stake in streaming service Hulu.

On Wednesday, AT&T said the deal brings to more than $11 billion the amount of money it will have raised from asset sales this year. The company said it expects to return to repurchasing shares in the fourth quarter, along with debt reduction.

Liberty is already the biggest pay-TV and broadband provider on the island. Cable tycoon John Malone, who holds a 25.5% voting stake in Liberty Latin America, and Liberty Latin America CEO Balan Nair have told investors they would like to expand in the region through disciplined mergers and acquisitions.

AT&T has been looking to sell the Puerto Rico business for months and initially sought a valuation closer to $3 billion, according to people familiar with the matter. Liberty plans to finance the cash deal in large part by raising debt against the combined operation.

AT&T originally entered Puerto Rico in 2009 after it acquired Centennial Communications Corp., a rural telecom company with a large share of revenue from the island, for under $1 billion.

The complexity of the Puerto Rican unit slowed negotiations. Thousands of residents of the commonwealth spend several months out of the year on the U.S. mainland, for example, which made difficult the job of counting subscribers, according to another person familiar with the matter. The island also was heavily damaged in 2017 by Hurricane Maria.

Liberty Latin America is a publicly traded telecom and cable provider that operates in Chile, Puerto Rico, the Caribbean and other countries in Latin America. The company spun out last year from Liberty Global, the international cable operator headed by Mr. Malone. The Latin America operator currently has a market value of about $3 billion.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com and Drew FitzGerald at andrew.fitzgerald@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AT&T 1.75% 38.47 Delayed Quote.34.79%
GCI LIBERTY, INC. 0.85% 66.41 Delayed Quote.61.35%
LIBERTY GLOBAL PLC 1.26% 25.8 Delayed Quote.20.90%
LIBERTY LATIN AMERICA 0.38% 18.53 Delayed Quote.27.97%
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Financials (USD)
Sales 2019 182 B
EBIT 2019 30 738 M
Net income 2019 18 365 M
Debt 2019 156 B
Yield 2019 5,32%
P/E ratio 2019 15,4x
P/E ratio 2020 13,2x
EV / Sales2019 2,40x
EV / Sales2020 2,36x
Capitalization 281 B
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Mean consensus OUTPERFORM
Number of Analysts 29
Average target price 37,26  $
Last Close Price 38,47  $
Spread / Highest target 24,8%
Spread / Average Target -3,15%
Spread / Lowest Target -48,0%
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NameTitle
Randall L. Stephenson Chairman, President & Chief Executive Officer
John J. Stephens CFO, Principal Accounting Officer & Senior EVP
Laura D'Andrea Tyson Independent Director
Matthew K. Rose Lead Independent Director
Scott T. Ford Independent Director
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