AT&T, facing $158 billion debt, to sell Puerto Rico network for $2 billion

2Bee

or not 2B
Moderator
Oct 27, 2017
6,054
AT&T has agreed to sell its wireless and wireline networks in Puerto Rico and the US Virgin Islands for $1.95 billion to Liberty Latin America. The deal will help AT&T pay a small portion of the debt load created in part by its acquisitions of DirecTV and Time Warner Inc.
AT&T has said it intends to cut its debt by up to $20 billion in 2019. The company already lowered its long-term debt from $166 billion as of December 31, 2018 to $158 billion on June 30, 2019. AT&T told investors today to expect share buybacks later this year as the company continues improving its debt-to-earnings ratio.
Source

AT&T might actually have put itself in too much debt after buying DirectTV for 67 billion and then TimeWarner for 85 billion.
 

Ricky_R

The Fallen
Oct 27, 2017
2,399
Liberty got a big chunk of the cellphone market now. They were mostly a cable/internet provider.
 

massivekettle

Member
Aug 7, 2018
605
Debt figure is quite misleading as they only have c. $20bn becoming due by the end of 2022. Which is peanuts considering AT&T generates between $20-40bn of cash flow (pre-dividends) on an annual basis.
 

Pwnz

Member
Oct 28, 2017
6,779
Places
Unfortunately AT&T will do fine. They have a lot of IP that prints billions every quarter. Their P/E is 13.5 which is very healthy given that stocks are still inflated a bit. They pay good dividends, most of us with 401ks own a few hundred dollars in AT&T because they're so big.
 

jey_16

Member
Oct 28, 2017
489
Considering how low interest rates are, borrowing is super cheap these days for companies

there is a reason why even Apple has $100b in debt
 

Chaos Legion

Member
Oct 30, 2017
3,380
While the nominal number may seem daunting, in terms of leverage, AT&T isn't that levered compared to rivals (VZ at $119bn, Comcast at $101bn). Given the nature of us business, the company's cash flows are incredibly robust and it's EBITDA is approximately a whopping $60bn.

If they sell or spin DirectTV, it'll be because it was a stupid purchase as opposed to pressure from it's leverage level.
 

Bunzy

Member
Nov 1, 2018
562
Very misleading article, makes it seem like att in dire straights. Company makes a lot of money and is always in the black
 
OP
OP
2Bee

2Bee

or not 2B
Moderator
Oct 27, 2017
6,054
Very misleading article, makes it seem like att in dire straights. Company makes a lot of money and is always in the black
The article is mostly dealing with the details of this sale.

And while I'm sure AT&T will still be fine, they have said so themselves they are looking for ways to lower their debt.
 

Veliladon

Member
Oct 27, 2017
2,983
Considering how low interest rates are, borrowing is super cheap these days for companies

there is a reason why even Apple has $100b in debt
Apple has $100b in debt because servicing cheap debt is far less expensive than the taxes on the repatriation of profits from Ireland. AT&T has $150b in debt because they're fucking idiots.
 

Dierce

Member
Oct 27, 2017
1,928
This is Disney's change to buy DC. Doo eeet.

If it leads to Disney eventually getting split up by president Warren
 

Vagabond

Member
Oct 26, 2017
1,240
United States
As a T-Mobile employee... I am so glad they didn't take us over a few years ago.
As a TMobile subscriber, I am too.

I cancelled my DirecTV (and subsequently had to reenable my service through a MDU) because their customer service has slid so far downhill. The worst customer service experience I have ever had, and spent over 10 hours on the phone over 6-7 calls for something that should have been simple. I had the exact same problem 4-5 years ago and it was resolved in a 15 minute phone conversation. I recall having a similar experience when I had ATT before switching to TMO over a billing issue. I'll do my best to never purchase a service through ATT again.

Meanwhile, TMO has always given me great customer service and they've only improved. I haven't had an issue that took long, and I've even gotten the same rep a couple of times when I did have an issue. Not sure how they made that possible but it was an awesome touch.
 

Faenix1

Member
Oct 27, 2017
1,203
Canada
As a TMobile subscriber, I am too.

I cancelled my DirecTV (and subsequently had to reenable my service through a MDU) because their customer service has slid so far downhill. The worst customer service experience I have ever had, and spent over 10 hours on the phone over 6-7 calls for something that should have been simple. I had the exact same problem 4-5 years ago and it was resolved in a 15 minute phone conversation. I recall having a similar experience when I had ATT before switching to TMO over a billing issue. I'll do my best to never purchase a service through ATT again.

Meanwhile, TMO has always given me great customer service and they've only improved. I haven't had an issue that took long, and I've even gotten the same rep a couple of times when I did have an issue. Not sure how they made that possible but it was an awesome touch.
You think that's bad? Wasnt from ATT but I once had to fight a rural ISP to Cancel my fucking service because it's been years and they could never make it usable. After two week, they emailed me a cancellation form for me to sign and email back. ..the fuck? Was just a few months ago. ol
 

lmcfigs

The Fallen
Oct 25, 2017
7,276
I guess I still don’t get finance. How are these companies in such massive debt and I guess not out of business? Like why is the stock price not closer to zero?
 

jfkgoblue

Member
Oct 27, 2017
3,361
yeah everyone forgets that the current AT&T is actually SBC Global and they bought the original AT&T and took their name

the way corporations work is like high fantasy or some shit
The funny thing is that SBC was formed when the AT&T breakup happened and then 20 years later, they buy and liquidate the original AT&T and take its name.
 

Matt

The Terror that Flaps in the Night
Moderator
Oct 24, 2017
2,809
The Time Warner acquisition made sense.

The Direct TV purchase was a giant mistake.
 

jfkgoblue

Member
Oct 27, 2017
3,361
I'm curious how it has been allowed to rebuy most of them back.
Because the communications industry isn’t even close to being the Monopoly that AT&T was. There were literally zero other Telephone service providers for 99% of the US. They also controlled the means of production so they could essentially charge whatever they liked as they also owned Weatern Electric. This was the straw that broke the camel’s back as previously the US Government allowed them to operate as a monopoly for 60 years through an agreement.
 

Chaos Legion

Member
Oct 30, 2017
3,380
I guess I still don’t get finance. How are these companies in such massive debt and I guess not out of business? Like why is the stock price not closer to zero?
For a simple way to look at it.
For every company, Assets = Liabilities (debt is a liability) + Equity.

AT&T has $547bn of assets. Their debt is approximately $157bn (total liabilities, or claims against the company, including debt, amounts to $353bn). So if you subtract their liabilities from their assets, the remaining portion $194bn, is book equity. So AT&T, despite having a lot of debt, has enough assets that there is still value in the company (equity) after all of the liabilities are considered.

So that's a simple way to look at it.

Now with regards to debt. $160bn is a lot! But you have to look at a few things when speaking about a company's amount of debt. It's leverage (total amount of debt / company's earnings), interest expense and free cash flow (how much cash a company can generate to pay down debt after all other uses are paid for).

AT&T earnings (EBITDA) are about $60bn. So it's leverage (debt/EBITDA) will be around 2.5x by year end. That's actually not terrible. Disney because of the acquisition of Fox is closer to 3x, I believe.
It generates roughly $30-$40bn of free cash flow per year, so it can afford to pay the interest on its debt as well as paydown debt as well.

AT&T, Verizon, Comcast and Charter can afford to service their debt because their cash flows are generally stable. If a recession hits, people still need their cell service and ISP.