AT&TInc. has agreed to sell its Puerto Rican and U.S. Virgin Islands businesses to Liberty Latin AmericaLtd. for $ 1. 95 billion in cash, allowing the telecommunications giantto shave its debt loadand move closer to repurchasing shares.
AT & T’s operation in Puerto Rico provides cellular, landline and internet connections. It had 1.1 million wireless subscribers. As part of the deal, about 1, 300 AT&T employees will be transferred to Liberty Latin America.
The two companies said they expect the deal to close within six to nine months. The Wall Street Journal earlier Wednesday reported the companies had agreed to a deal.
Puerto Rico accounts for a small sliver of AT & T’s domestic operations, but shedding the unit will help it work down a large debt load accumulated through its$ (billion-plus acquisition of Time Warner) last year.
The deal signals progress on AT & T’s goal of selling noncore assets, something activist investor Elliott Management Corp., whichrecently disclosed a stake in the company, is also pushing. AT&T has also soldits stake in streaming service Hulu.
On Wednesday, AT&T said the deal brings to more than $ 11 billion the amount of money it will have raised from asset sales this year. The company said its expects to return to repurchasing shares in the fourth quarter, along with debt reduction.
Liberty is already the biggest pay-TV and broadband provider on the island. Cable tycoon John Malone, who holds a 25 .5% voting stake in Liberty Latin America, and Liberty Latin America CEO Balan Nair have told investors they would like to expand in the region through disciplined mergers and acquisitions.
Liberty plans to finance the cash deal in large part by raising debt against the combined Puerto Rican operation, one person familiar with the matter said.
AT&T originally entered Puerto Rico in 2009 after it acquired Centennial Communications Corp., a rural telecom company with a large share of revenue from the island, for under $ 1 billion.
The complexity of the Puerto Rican unit slowed negotiations. Thousands of residents of the commonwealth spend several months out of the year on the U.S. mainland, for example, which made difficult the job of counting subscribers, according to another person familiar with the matter. The island also was heavily damaged in 2017 by Hurricane Maria.
Liberty Latin America is a publicly traded telecom and cable provider that operates in Chile, Puerto Rico , the Caribbean and other countries in Latin America.The company spun out last yearfrom Liberty Global, the international cable operator headed by Mr. Malone. The Latin America operator currently has a market value of about $ 3 billion.
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