AT&T Inc is likely to pay a whooping amount worth USD48.5 billion to purchase the operations of DirecTV. This can be seen as latest example of the convergence of the wireless industry and the television market in the US. This comes as customers are now viewing more video on their mobile devices.
The deal was revealed on May 18 2014, and shows how AT&T is trying hard to find new growth prospects in the maturing U.S. cellular business, which has become highly competitive.
The acquisition will enable AT&T to enhance its cellular, broadband, TV and fixed-line phone services, as a result of combination with DirecTV, which is the top U.S. satellite TV provider and has 20 million customers.
The deal will also benefit DirecTV as the company will now be able to provide broadband Internet for the first time to its U.S. customers. The company was unable to provide this service before that made it vulnerable to cable rivals, which have the ability to provide Internet service through their networks.
AT&T CEO Randall Stephenson has been quoted saying on a conference call that “It gives us the parts to fulfill a vision we have had for a couple of years, that is, the opportunity and the ability to take premium content and deliver premium content over multiple points for the customer, whether it be through a smartphone, through a tablet, or television or laptop.”
DirecTV CEO Mike White will continue to head the operations of the satellite television business, which will continue to be based outside Los Angeles in El Segundo, California.
AT&T and DirecTV announcement came months after Comcast Corp offered USD45 billion for the acquisition of Time Warner Cable Inc. The regulatory approval for the deal is still pending.
AT&T is paying USD95 per DirecTV share in a combination of stock and cash, while it will finance the cash portion through funds on hand, asset sales and financing already lined up.