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AT&T (NYSE:T) Could Sell DIRECTV At A Loss Considering It Has Been Losing TV Subscribers

AT&T Inc. (NYSE:T) is planning to go ahead with the sale of DirecTV regardless of receiving very low bids of less than a third of the value it bought it at.

AT&T could sell Direct TV at $15.75 billion

The company acquired DirecTV in 2015 for around $49 billion and assumed a $18 billion debt to bring the total value of the acquisition to $67 billion. According to the New York Post, the process could be a “fire sale” as opening bids that the company has received are 3.5X earnings, which implies that the division could be valued at around $15.75 billion. Although rival Dish Network (NASDAQ:DISH) has not submitted a bid, a merger could likely be considered, but a deal could face a lot of scrutiny from antitrust regulators.

According to people familiar with the issues, the company has been considering private investors to acquire the majority of the DirecTV division and thus help it cope with a huge drag in operations. The Wall Street Journal reported that AT&T has engaged private equity investors about the TV divisions with possible bids coming from the likes of Platinum Equity and Apollo Global Management.

AT&T’s TV business losing subscribers

Investors have been concerned about AT&T’s strategy with the company’s share price dropping from over $40 in 2016 to below $30 currently. The DirecTV business has been losing subscribers, and since the beginning of 2017, it has lost around 7.3 million TV subscribers of its premium TV subscribers from a total of 25.45 million but hasn’t reported the number of satellite subscribers lost.

Interestingly a sale is not certain, but it is likely that AT&T could still retain a minority interest in DirecTV even if they get a buyer. The company is looking to sell around 50% of the asset, which will help the carriers dispose of the fast-shrinking unit off its books but continue enjoying the benefits of the large distribution network. The sale was previously announced last year before the company decided to keep the business.

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