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AT&T Sells Stake In America Movil To Mitigate Regulatory Concerns About DirecTV Deal

By: Trefis
Posted: 7/8/2014 2:03:00 PM
Referenced Stocks: T;DTV

AT&T ( T ) has sold its 8.3% stake in Latin American carrier America Movil to avoid any potential conflict of interest and help it gain regulatory approval for its acquisition of DirecTV ( DTV ). America Movil is a major competitor of DirecTV in the pay-TV market in Latin America, and the AT&T-DirecTV deal puts AT&T in competition with the Carlos Slim-controlled telecom major, creating a potential conflict of interest.

AT&T's stake has been bought by Carlos Slim's holding company, Inmobiliaria Carso, which is also an existing shareholder in America Movil. Inmobiliaria Carso will pay AT&T $5.57 billion for its 8.3% stake, of which $4.57 billion will be paid at the close of the deal and the remaining $1 billion within the subsequent 60 days. The cash generated from this sale is expected to help AT&T in its $48.5 billion acquisition of DirecTV's equity ( see more about the AT&T-DirecTV deal here ).

See our complete analysis for AT&T here

DirecTV is the largest satellite-TV company in the U.S., and its takeover is likely to help AT&T become a leader in content distribution across various platforms including mobile, broadband and TV. Considering the difficult regulatory process and past unsuccessful deals in the industry, such as DirecTV-Dish Network and AT&T-T Mobile, AT&T is leaving no stone unturned to ensure the deal is approved.

We have a $37.50 price estimate for AT&T , which is slightly ahead of the current market price.

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