AT&T Plans IPO for Its Latin American TV Business -- Update
By Drew FitzGerald
AT&T Inc. plans to separate most of its Latin American operations from its main business in an initial public offering that could raise billions of dollars for the U.S. carrier's core business.
The company said Wednesday it had filed documents for an IPO for a minority stake in DirecTV Latin America in the first half of this year.
The telecom company has spent months unsuccessfully searching for a buyer for its Latin American satellite-television operations, according to a person familiar with the process.
The unit includes millions of television subscribers in the Caribbean and in South America that AT&T inherited when it bought DirecTV in 2015. It also includes a 93% stake in Sky Brazil, a satellite provider. The division had 13.6 million connections that generated more than $5 billion of revenue last year.
Executives have estimated the business, which doesn't include AT&T's Mexican cellphone and satellite TV operations, could fetch about $10 billion in an IPO, the person said.
AT&T executives often call Mexico a long-term priority for the company but stop short of making the same commitment to other Latin American markets. Political scandals have weakened the currency in its biggest South American satellite market, Brazil, complicating the situation for a business that was already struggling to reliably grow its subscriber base.
"When AT&T first announced the acquisition of DirecTV, the management team seemed most optimistic about Brazil," BTIG analyst Walt Piecyk wrote last year in a research note. Since then, "the currency and commodity meltdowns as well as billing issues in Brazil shifted AT&T's Latin American story to Mexico."
Proceeds from a Latin American spinoff could help fund AT&T's pending $85 billion takeover of media giant Time Warner Inc., though a 2017 bond sale that raised more than $20 billion gave the company more than enough liquidity to fund the cash-and-stock deal on its own.
Customer growth in DirecTV's other Latin American markets has been fleeting in recent years, though the business started growing again in the fourth quarter. The traditional TV business has declined more quickly in the U.S., where DirecTV shed about 554,000 satellite video connections last year.
Write to Drew FitzGerald at firstname.lastname@example.org
(END) Dow Jones Newswires
February 07, 2018 10:23 ET (15:23 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.