AT&T to Sell Puerto Rico, USVI Operations for $1.95B, Retains FirstNet Responsibilities
Wednesday, October 09, 2019 | Comments

AT&T plans to sell its wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands (USVI) to Liberty Latin America, while retaining its First Responder Network Authority (FirstNet) responsibilities.

AT&T will receive $1.95 billion in cash at close. The transaction includes network assets, including spectrum; real estate and leases; customers, including 1.1 million wireless subscribers; and contracts. AT&T retains its dedicated FirstNet network core and service capabilities.

Liberty Latin America, a commercial operator in Latin America and the Caribbean, will support AT&T’s FirstNet build in Puerto Rico and the U.S. Virgin Islands, expanding Long Term Evolution (LTE) coverage and capacity to meet the needs of first responders in the region. Eligible first responders subscribing to AT&T’s FirstNet services in Puerto Rico and the U.S. Virgin Islands will still have access to the capabilities of the FirstNet network platform, including priority and pre-emption.

"The sale does not affect AT&T’s FirstNet commitment and should not impact the experience for current or future FirstNet subscribers," said an AT&T spokesperson.

“AT&T has committed to fulfilling approved FirstNet state plans for all 50 states, five territories and the District of Columbia, including for Puerto Rico and the U.S. Virgin Islands," said a FirstNet Authority spokesperson. "This remains unaffected.”

At close, about 1,300 current AT&T employees will move to Liberty Latin America. AT&T will provide certain transition support functions to Liberty Latin America following close of the transaction.

AT&T said it has the most coverage on Puerto Rico, according to Mosaik. The FCC last month approved $950 million in funding to improve, expand and harden communications networks in Puerto Rico and USVI.

AT&T is under pressure from shareholders to decrease its debt, and executives have publicly announced plans to sell assets to reduce its debt load. “Given the company’s confidence in reaching a net debt-to-adjusted EBITDA (earnings before interest, taxes and depreciation and amortization) ratio in the 2.5x range this year, shareholders should expect that share buybacks will be in the mix in the fourth quarter of 2019, along with continued de-levering,” said an AT&T statement about the sale.

“This transaction is a result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization,” said John Stephens, AT&T chief financial officer (CFO). “But doing so only made sense if we received a fair value from a buyer that is committed to taking this well-run business, with its skilled employees and loyal customer base, and help it thrive. Liberty Latin America has a strong reputation for quality of service, and we believe they have the experience to build on the success of these operations.”

Under the terms of the agreement, AT&T will support Liberty Latin America for up to three years following the acquisition to enable the efficient transition of services. Following the acquisition, customers will continue to receive free roaming services among Puerto Rico, the U.S. Virgin Islands and the mainland United States, Mexico and Canada. AT&T will retain DIRECTV and certain global business customer relationships.

The transaction is subject to review by the FCC and the Department of Justice. The two companies expect the deal to close within six to nine months.

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