Liberty LATAM spends $1.95bn on AT&T operations

AT&T’s businesses in Puerto Rico and the US Virgin Islands have been acquired by Liberty Latin America in a strategic move to create an integrated consumer and B2B communication and entertainment provider.  

Liberty Latin America (LLA) announced its definitive agreement to acquires AT&T’s wireless and wireline operations in Puerto Rico and the US Virgin Islands in an all-cash transaction. The acquisition assets are valued at an enterprise of $1.95 billion on a cash and debt-free basis.

The acquired assets provide consumer mobile and B2B services in the region, excluding DirecTV customers.

AT&T’s business In Puerto Rico represents approximately 90% of the revenue of the assets to be acquired and is the leading provider of mobile services with the fastest network and a strong spectrum position, in addition to a well-invested fibre backhaul network.

LLA president and chief executive Balan Nair said: “This strategic and complementary acquisition is an exciting and unique opportunity to expand our business in one of our best markets.”

In a statement, he said the acquisition was an “attractive valuation,” and was consistent with the firm’s “disciplined approach towards M&A.”

This combination of operations will enable LLA to achieve in-market consolidation with significantly associated synergies, expand its product portfolio with the leading post-paid mobile network, add a predominantly subscription-based business, increase our distribution channels on the island, increase our B2B presence and materially increase our US dollar revenue.

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He added: “The combination of AT&T’s leading mobile businesses with Liberty Puerto Rico’s leading high-speed broadband and TV business will create a strong and competitive integrated communications player, with combined annual revenue of over $1.2 billion2 in Puerto Rico and $4.6 billion2 across LLA.

“By continuing to invest in digital infrastructure, innovation, 5G networks and a friendly customer service experience, we are confident that this new combination will support our long-term growth profile and that this deal will be free cash flow accretive on a per-share basis.”

Under the terms of the agreement, AT&T will support LLA for a period up to 36 months following the acquisition enabling the efficient transition of services.

Following the acquisition, customers in the deal will continue to benefit from free-roaming services between Puerto Rico, the US Virgin Islands and the mainland US, Mexico and Canada.

LLA will continue providing leading enterprise services for AT&T’s retained global business customers and support AT&T’s FirstNet program for first responders in Puerto Rico and the U.S. Virgin Islands.

LLA intends to finance the $1.95 billion acquisition plus fees and expenses through a combination of $2.2 billion in borrowings on the combined acquisition assets and Liberty Puerto Rico (including refinancing $922.5 million in existing term loans at Liberty Puerto Rico) and the remaining approximately $750 million from Liberty Latin America’s committed liquidity of $2.0 billion at June 30, 2019.

The transaction is subject to customary closing conditions, including reviews by the US Federal Communications Commission and the Department of Justice.

The transaction is expected to close in Q2 2020.

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