AT&T has cancelled the IPO for its DirecTV satellite TV assets in South American and the Caribbean, citing sluggish market conditions.
The company had been hoping to raise as much as $653 million in proceeds that would have been all used to pay down debt associated with its proposed $85.4 billion purchase of Time Warner Inc.
The Latin American DirecTV assets are controlled by a holding company called Vrio Corp., which was the subject of the initial public offering AT&T announced early last month. Under AT&T’s plan, it would have kept a 98% controlling interest in Vrio following the IPO.
Earlier on Wednesday, before AT&T announced its cancellation plans, the company reduced the number of shares being offered by nearly half, to 15 million. It also cut the targeted price range to $16-$17 from $19-$22.
The scuttled IPO is a blow to AT&T in a quest to cut a debt load that some analysts believe could balloon to $180 billion if the Time Warner Inc. merger is ultimately approved.
DirecTV Latin America controlled about 13.6 million subscribers as of the end of 2017, a 9.3 year-over-year increase. Revenue from the region was up 10.9% to $5.57 billion last year.
Vrio operates under the DirecTV brand in Barbados, Columbia, Curacao, Ecuador, Trinidad and Tobago, Venezuela, Argentina, Chile, Peru and Uruguay. It operates under “Sky” in Brazil.
While AT&T has expressed enthusiasm about the Mexican wireless market, it hasn’t necessarily been outwardly bullish on the longterm prospects of satellite TV in Latin America, despite the current performance.
The IPO was being led by by Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley.