February 7, 2018 / 1:53 PM / 5 months ago

AT&T files confidentially for IPO of DirecTV Latin America stake

(Reuters) - AT&T Inc (T.N), which owns satellite television service DirecTV, on Wednesday said it had filed confidentially for an initial public offering for its minority interest in DirecTV Latin America.

FILE PHOTO - An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

Shares of AT&T rose nearly 2 percent to $37.45 in morning trade.

The No. 2 U.S. wireless carrier has been reviewing its portfolio to find ways to help reduce its debt, which will increase to about $180 billion once its $85.4 billion acquisition of Time Warner Inc TWX.N closes.

The IPO, expected to come in the first half of 2018, is unlikely to affect AT&T’s debt profile meaningfully, New Street Research analyst Jonathan Chaplin said.

“It is a very very small step in the right direction ...It probably won’t move the needle very much,” Chaplin said.

Reuters, citing sources, reported last year that AT&T was evaluating a sale of its pay TV operations in Latin America. The assets could have been valued at more than $8 billion at the time. (reut.rs/2f5y6R4)

“We expected that AT&T would sell it (DirecTV Latin America stake) rather than publicly list it, this could presumably mean they weren’t able to find a buyer,” MoffettNathanson analyst Craig Moffett said, raising concerns over the valuation of the assets.

Cable service providers have been facing stiff challenges as the industry battles with cord-cutting, where people are moving toward on-demand video streaming services such as Netflix Inc (NFLX.O) and Amazon.com Inc’s (AMZN.O) Amazon Prime.

The Latin America business, excluding Mexico, has been AT&T’s best candidate to divest, as the region is largely non-strategic and “didn’t fit very well with any of their other significant initiatives”, Moffett said.

AT&T, which acquired DirecTV for $48.5 billion in 2015, reported about 13.6 million video connections for Latin America as of Dec. 31, 2017, an addition of 1.1 million from a year earlier.

Reporting by Supantha Mukherjee and Muvija M in Bengaluru; Editing by Maju Samuel

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