Liberty Latin America to acquire AT&T’s operations

Liberty Latin America to acquire AT&T’s operations in Puerto Rico and the US Virgin islands for $1.95bn

10 October 2019 | Natalie Bannerman

Cover

Liberty Latin America (LLA) has entered into a definitive agreement to acquire AT&T’s wireless and wireline operations in Puerto Rico and the US Virgin Islands for $1.95 billion.

The all-cash deal will enable LLA to offer consumer mobile and B2B services in Puerto Rico and the U.S. Virgin Islands, excluding DIRECTV customers.

“This acquisition is at an attractive valuation, in the mid-6s in terms of EV to OCF1 excluding synergies, and consistent with our disciplined approach towards M&A,” said Balan Nair (pictured), president and CEO, Liberty Latin America. “With this combination, we will achieve: in-market consolidation with significant associated synergies, expand our 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 weighting at LLA.”

In Puerto Rico, which represents approximately 90% of the revenue of the assets to be acquired, AT&T’s business 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.

Under the terms of the agreement, AT&T will support LLA for up to 36 months following the acquisition enabling the efficient transition of services. Following the acquisition, customers in the Acquisition Assets will continue to benefit from free roaming services between Puerto Rico, the US Virgin Islands and 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 US Virgin Islands.

“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 a combined annual revenue of over $1.2 billion in Puerto Rico and $4.6 billion across LLA,” continued Nair. “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.”

Liberty Latin America will finance the $1.95 billion acquisition through a combination of $2.2 billion in borrowings on the combined Acquisition Assets and Liberty Puerto Rico, and the remaining approximately $750 million from Liberty Latin America’s committed liquidity of $2.0 billion on 30 June 2019.

“I’m proud of what our team has built in this region,” added Jose J. Davila, VP-general manager for AT&T in Puerto Rico and the US Virgin Islands. “We look forward to joining Liberty Latin America to continue to deliver a superior experience for our valued customers here. And our committed and talented team will bring a wealth of experience to Liberty Latin America and continue to build on our success in Puerto Rico and the US Virgin Islands.”

Due for completion by Q2 2020, the transaction is subject to customary closing conditions.