AT&T’s proposed purchase of US satellite TV provider DirecTV will precipitate the sale of a $6 billion stake the US operator holds in America Movil but will not derail its plans to spend billions in forthcoming US spectrum auctions.
The $48.5 billion acquisition of DirecTV has a number of repercussions including the need for the US operator to offload its valuable stake in America Movil.
DirecTV’s interests in Latin America overlap a number of markets where America Movil is also present, so requiring the sale of its roughly 8 per cent stake.
In addition, AT&T has confirmed it will be among the bidders in US spectrum auctions, which are scheduled for later this year and 2015.
Participation will mean the US giant shells out further billions for the capacity to deliver future services, including video content.
The DirecTV transaction “does not alter AT&T’s plans to meaningfully participate in the FCC’s planned spectrum auctions later this year and in 2015”, it said.
The operator added it will bid “at least $9 billion” in the 2015 incentive auction provided there is sufficient spectrum on offer for a 2 x 10 MHz footprint across the US.
Meanwhile AT&T has already spoken with America Movil about its need to sell. AT&T nominees to America Movil’s board of directors will offer their resignations immediately.
DirecTV has 18 million subscribers in Latin America where it claims to be the leading pay TV provider. Competition issues arise for AT&T in a number of markets including Brazil and Colombia, so requiring the disposal of a valuable asset.
AT&T hopes the DirecTV deal will shore up its competitive position in the US against cable TV operators such as Comcast which earlier this year announced a merger with Time Warner.
AT&T has about 5.7 million TV customers through its fixed U-verse service, while DirecTV brings 20.3 million subscribers. Its content will also be available to fill AT&T’s 4G network, so potentially providing a competitive edge against rivals in the mobile market.