Telecom giant AT&T has entered into an agreement with private equity firm TPG, which calls for struggling satellite TV provider DirecTV to become a standalone company.
The deal calls for AT&T to sell DirecTV, a 30 percent stake in AT&T TV, and its U-Verse for $ 1.8 billion in cash in exchange for TPG.
The transaction is valued at $ 16.25 billion in satellite TV assets – a portion of the $ 48.5 billion AT&T opened in 2015 under former chief executive Randall Stephenson.
Telecom and media giants including 5G wireless and streaming video service HBO Max led the way to focus on their growing business, CEO John Stanley said in announcing the deal.
The companies will create a new venture called DirecTV, which will own and operate pay video services.
AT&T will also receive $ 7.8 billion from the new venture after the spinoff is completed, including the assumption of $ 200 million in debt. He said it would use the money to pay off the debt.
Under Stankey, the company has been directed to reduce its $ 149 billion debt burden and focus on core-assets such as the company’s wireless business to expand its new streaming service HBO Max.
AT&T placed DirecTV in the block last year, but did not like the initial offers, which came in at more than $ 15 billion, as The Post reported in December.
DirecTV is pummeled by cord-cutting, bleeding subscribers and booking $ 15.5 billion fee In AT & T’s fourth quarter earnings report last month.
In recent months, AT&T had focused on divesting its stake for private equity groups to avoid regulatory concerns.
AT&T said on Thursday that by holding a majority stake, DirecTV could still leverage its distribution reach. The telecommunications giant said the new DirecTV would have a commercial contract with AT&T to continue offering bundled pay-TV service to AT&T’s wireless and Internet customers. Additionally, AT&T and the new DirecTV will have commercial agreements that will allow new DirecTV video subscribers to continue access to HBO Max. “
“The agreement is with key strategic businesses to focus our investment and operations and to increase our customer relationships on connectivity and content, and 5G wireless, fiber and HBO Max,” said Stanke.
He said: “TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimal value creation.”
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