AT&T to Sell its Operations in Puerto Rico and the U.S. Virgin Islands to Liberty Latin America
Via AT&T News Room
Oct 9, 2019
AT&T announced today that it plans to sell its wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands to Liberty Latin America. The transaction includes network assets, including spectrum; real estate and leases; customers, including 1.1 million wireless subscribers; and contracts. At close, approximately 1,300 current AT&T employees will move to Liberty Latin America. To ensure a smooth transition for its customers, AT&T will provide certain transition support functions to Liberty Latin America following close of the transaction. Under terms of the agreement, AT&T will retain FirstNet responsibilities and relationships as well as DIRECTV and certain global business customer relationships.
The sale does not affect AT&T’s FirstNet commitment. AT&T retains its dedicated FirstNet network core and service capabilities. Among other services, post-close Liberty Latin America will support AT&T’s FirstNet build in Puerto Rico and the U.S. Virgin Islands, expanding LTE coverage and capacity to best meet the needs of first responders in the region. Eligible first responders subscribing to AT&T’s FirstNet services in Puerto Rico and the U.S. Virgin Islands will still have access to the benefits and capabilities of the FirstNet network platform, including priority and preemption.
“I’m proud of AT&T’s history in Puerto Rico and the U.S. Virgin Islands,” said Jose J. Davila, AT&T Vice President-General Manager for the region. “I’m especially proud of our network and the recent network enhancements that have helped AT&T rank as the fastest network in Puerto Rico.1 AT&T also has the most coverage on the island, according to Mosaik. Our experienced and committed team members will continue to support these operations as we join Liberty Latin America. Liberty Latin America has expressed its commitment to provide high-quality communications services to the people of Puerto Rico and the U.S. Virgin Islands. And we’re confident that it is equally committed to supporting these communities.”
“The combination of AT&T’s leading mobile and wired businesses with Liberty Puerto Rico’s leading high-speed broadband and TV business will create a strong and competitive integrated communications player,” said Balan Nair, president and CEO, Liberty Latin America. “At Liberty Latin America, we are focused on investing in digital infrastructure, innovation and 5G networks and on delivering a friendly customer service experience. This transaction is evidence of that, and we are confident that this new combination will be good for our customers and our employees, including those joining us from AT&T.”
Under the terms of the agreement, AT&T will receive $1.95 billion in cash at close, subject to customary closing adjustments. The transaction is subject to review by the FCC and the Department of Justice. The two companies expect the deal to close within 6 to 9 months.
To reach its de-leveraging goal, AT&T plans to use free cash flow after dividends and to continue monetization initiatives. AT&T has already surpassed its monetization goal of a net $6 billion to $8 billion in 2019, with a cumulative total of $10 billion raised year to date — from both asset monetizations and working capital initiatives. With this deal, the total of completed or announced monetization efforts this year is more than $11 billion.
Given the company’s confidence in reaching a net debt-to-adjusted EBITDA ratio in the 2.5x range this year, shareholders should expect that share buybacks will be in the mix in the fourth quarter of 2019, along with continued de-levering.
“This transaction is a result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization,” said John Stephens, AT&T chief financial officer. “But doing so only made sense if we received a fair value from a buyer that is committed to taking this well-run business, with its skilled employees and loyal customer base, and help it thrive. Liberty Latin America has a strong reputation for quality of service, and we believe they have the experience to build on the success of these operations.”
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