Telecommunications giant AT&T (T) is selling its remaining stake in DirecTV as it refocuses on wireless 5G and fiber-optic connectivity services.
AT&T announced Monday that it will sell 70% of its stock to private equity firm TPG (TPG), with expected cash payments totaling $7.6 billion from DirecTV and TPG over the next six years.
AT&T added 419,000 monthly paid wireless subscribers in the second quarter and expects revenue growth in the 3% range for the rest of 2024.
Meanwhile, DirecTV announced it will acquire EchoStar’s satellite TV business, including Dish TV. Under the deal, DirecTV will pay EchoStar (SATS) $1 and assume Dish’s $9.75 billion in debt.
The acquisition is part of an effort to counter the streaming industry’s dominance over the television market.
“DirecTV operates in a highly competitive video distribution industry,” DirecTV CEO Bill Morrow said in a statement. “With increased scale, we expect the integration of DirecTV and Dish to enable us to collaborate more with programmers to realize our vision for the future of television: aggregating, curating and delivering content tailored to customer interests. We are in a position to realize operational efficiencies while creating value for our customers through additional investment.”
DirecTV said the agreement will allow it to offer smaller packages at lower prices and expand its programming selection. It will also allow the company to remain competitive in the television industry as U.S. consumers abandon traditional cable and satellite services in favor of major streaming platforms.
DirecTV and Dish have collectively lost 63% of their satellite customers since 2016, the company said. However, DirectTV estimates that the combined company could potentially save $1 billion a year in costs three years after the deal closes.
Both transactions are expected to close in late 2025.
The deal is also expected to reduce Ecostar’s debt by approximately $11.7 billion and reduce refinancing requirements by approximately $6.7 billion by 2026.
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