AT&T, the third largest telecom operator based on mobile subscribers, has initiated talks with private-equity firms, including Apollo Management, to sell a significant minority stake in its DirecTV, AT&T Now and U-Verse pay-TV businesses, CNBC reported.
AT&T aims to retain majority ownership of the businesses, and would maintain ownership of U-verse infrastructure, including plants and fiber. The buyer would control the pay-TV distribution operations and consolidate the business on its books.
A deal may value DirecTV at less than $15 billion including debt, the report said. AT&T acquired DirecTV in 2015 for $67 billion with debt. A deal will not include DirecTV’s Latin American business.
AT&T ended the third quarter with about 17 million legacy TV subscribers (DirecTV and U-verse combined), down more than 16 percent from a year earlier. AT&T Now customers fell 40 percent to 683,000.
AT&T has pivoted away from legacy pay-TV since acquiring DirecTV, focusing instead on adding HBO Max streaming subscribers. The satellite TV provider has lost millions of subscribers in recent years as customers have fled to cable companies that also offer high-speed broadband or cancelled traditional bundled TV altogether.
“AT&T is trying to do something very hard,” Craig Moffett, a telecom analyst at MoffettNathanson, wrote in a note to clients after AT&T’s third quarter earnings. “They have to manage a portfolio of declining businesses by slashing their costs, while still not hurting their cash generation prospects too badly.”