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AT&T might actually have put itself in too much debt after buying DirectTV for 67 billion and then TimeWarner for 85 billion.
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AT&T, facing $158 billion debt, to sell Puerto Rico network for $2 billion
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AT&T might actually have put itself in too much debt after buying DirectTV for 67 billion and then TimeWarner for 85 billion.
goddamn they are everywhere, why are they burning money so bad
As a former contractor for Time Warner cable, that would do it
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.
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.
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.
If they sell or spin DirectTV, it'll be because it was a stupid purchase as opposed to pressure from it's leverage level.
It's commonly referred to as Warner Media. The article even called it Warner Media once but then also says Time Warner for some reason.
OP
OP
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.
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.
They acquired the media assets of Time Warner (after it spun off Time Warner Cable which was acquired by Charter) so they didn't acquire two competing services.
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
Different AT&T
also Verizon and T-mobile kinda ensure no monopoly.
Also to kinda give you an idea, Verizon and AT&T are both companies that were split from the original AT&T.
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.
Sure but It basically bought back most of those companies that the og was split into. So is it really that different?
I'm curious how it has been allowed to rebuy most of them back. It's larger than it was when they split them up the first time.
The purchase of Warner made sense to me. The Directv purchase never really did. It seems kinda pointless at this point with Warner leveraging streaming very hard like many other companies.
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.
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.