AT&T is considering selling off some of its pay TV business in Latin America to help facilitate its planned acquisition of Time Warner for $85.4 billion, after Brazil’s antitrust regulator raised concerns about the acquisition.
AT&T inherited its Latin American operations, including 93% of satco Sky Brasil, from its $49 billion merger with DirecTV in 2015. AT&T also now owns PanAmericana satellite and cable television services for over 13.6 million pay TV subscribers across Venezuela, Argentina, Colombia, Peru, Ecuador, Chile and Uruguay. As of Q2, the Latin American business generated $1.4 billion in revenue, half of which came from Sky Brasil, according to New Street Research.
The U.S. Justice Department is currently reviewing AT&T’s proposed acquisition of Time Warner, but assuming the deal is approved, the purchase will drive up AT&T’s debt to over $180 million. The Latin American assets are valued at over $8 billion, according to a report from Reuters.
The U.S. and Brazil are the last two countries to sign off on the proposed acquisition, as sixteen other countries implicated in the deal have already agreed to its terms. While the U.S. is expected to approve the deal, Brazil has emerged in the past few weeks as a final obstacle to AT&T’s acquisition.
Brazil anti-trust agency CADE has argued that the transaction should be rejected unless AT&T makes promises to sell off its assets in Brazil. CADE warned that should the acquisition be approved, the resulting company would violate Brazil’s regulations around service providers own content networks.
“Sky and Time Warner already have significant market power, such alignment would create incentives for closing in both the licensing and programming market, as well as operation of TV by subscription TV, generating competition concerns,” CADE said in a statement last month, which was translated by Financial Times, adding that Time Warner could “gain access to sensitive information from all its competitors through Sky.”
AT&T released its own statement, saying it would work with CADE to “clarify any issues they may have to promptly reach a final resolution on the matter.”
The company has not decided whether or not it’ll sell off its Latin American assets. AT&T also owns a 41% stake in Sky Mexico. However, AT&T will likely keep its Mexico business, as that business is considered more strategically beneficial, and the company has made a series of wireless investments in the country recently.
AT&T is pursuing a number of other tactics to raise funds and pay down debt for the acquisition. It’s hoping to raise some $22.5 billion through a seven-tier bond offering; and the company is considering selling its home security business, Digital Life, valued at $1 billion.