What’s up with… AT&T, DirecTV, Echostar/Dish

• AT&T to bank $7.6bn from DirecTV stake sale
• DirecTV to acquire Echostar’s Dish TV assets
• Echostar raises $5.1bn in new financing for its 5G network rollout

In today’s industry news roundup: AT&T agrees to sell its remaining 70% stake in DirecTV to TPG Capital for $7.6bn; DirecTV is bulking up by acquiring Echostar’s Dish TV assets (including Sling TV); Echostar raises $5.1bn from its investors to pump into its 5G Open RAN-based network; and much more!

Almost a decade after it acquired DirecTV for $49bn in a bid to bolster its video and pay-TV subscriber base, AT&T has sold its remaining 70% stake in DirecTV for just $7.6bn to TPG Capital, the company that bought a  30% stake in the company in 2021 for $7.1bn. The transaction, which is expected to close in the second half of next year, will allow AT&T to “continue to focus on being the leading wireless 5G and fibre connectivity company in America,” the telco noted. The move finally severs AT&T’s ties with the TV and entertainment sector into which it pumped tens of billions of dollars during the first two decades of this century just as the streaming companies, such as Netflix, were investing heavily in their streaming strategies, infrastructure and content.   

That’s not the end of the DirecTV action, though, as the company has announced the acquisition of Echostar’s video distribution business Dish DBS, including Dish TV and Sling TV, for a nominal sum of $1 (one US dollar) plus (and here’s the juicy financial bit) the assumption of $9.75bn of debt associated with the Dish business. You can read the details of the transaction here. The move will, if approved by regulators and the Dish bondholders, give DirecTV much greater scale, albeit in a market that is still shrinking as consumers continue to ‘cut the cord’ and switch away from traditional pay-TV and video services to streaming platforms. “The combination of DirecTV and Dish will benefit US video consumers by creating a more robust competitive force in a video industry dominated by streaming services owned by large tech companies and programmers. The transaction will provide consumers with compelling video options,” according to DirecTV. 

So DirecTV gets to bulk up and Echostar gets to offload a tonne of debt and a shrinking business so it can focus on Boost Mobile, the mobile services business that is supported by Echostar’s national 5G Open RAN-based network, which is still in the process of being rolled out (a bit later than initially agreed, as we reported recently). “This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners,” stated Hamid Akhavan, president and CEO at EchoStar, in this announcement. “With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network. This will provide US wireless consumers with more choices and help to drive innovation at a faster pace. We expect Dish and EchoStar bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures,” he added. 

And there’s more! As a result of striking the deal to offload the Dish DBS assets, Echostar has struck agreements with some of its existing investors to pump $5.1bn of new capital into the company to finance the ongoing construction of the 5G network and for general corporate purposes. Maybe Echostar will not go bust this year after all (as some industry watchers had predicted).  

Verizon has struck a deal to sell and lease back 6,339 towers across all 50 states and Washington DC to Vertical Bridge for $3.3bn. Under the terms of the deal, “Verizon will enter into a 10-year agreement to lease back capacity on the towers from Vertical Bridge, serving as the anchor tenant, with options that could extend the lease term up to 50 years… This agreement, along with Verizon’s existing build-to-suit joint venture with Vertical Bridge, will support Verizon’s efforts to drive down tower-related costs and provide greater vendor diversity in a concentrated industry,” the operator noted. Verizon’s CEO Hans Vestberg stated: “As the nation’s largest mobility provider, we are well positioned with greater financial flexibility to invest in our business, return value to our shareholders and make the nation’s best network even better for customers. This transaction builds on our existing relationship with Vertical Bridge while realising substantial value for this unique set of assets and allows us to be agile in optimising the network with one of the best operating partners.” Read more.

Vodafone UK and Three have responded to the UK’s Competition and Markets Authority (CMA)’s recent announcement that certain conditions would need to be met, and remedies agreed, if their proposed £16.5bn merger is to go ahead. While continuing with their defensive tone and general disagreement with the CMA’s overall view that the deal will be detrimental to competition in the UK mobile services market, the duo have agreed to some remedies and offered commitments to low tariffs for consumers and an attractive offer for mobile virtual network operators (MVNOs) to use their network infrastructure to provide competitive, alternative services. You can see the details of those remedies and commitments here. Industry analyst and PP Foresight founder Paolo Pescatore noted that it is “unsurprising” that the operators still have a “defiant position as they still disagree largely with the remedies, but encouragingly [are showing a] clear willingness to work closely on a number of areas, such as commitment to investment over the long period, price freeze on selected tariffs under £10 for two years and collaborating on increasing competition in wholesale. It remains to be seen if the [operators have] done enough on pricing to ease the CMA’s concerns. This could be a sticking point that makes or breaks” the merger deal, said Pescatore, though he concluded that “a path to approval” by the CMA still exists, “which is key for all parties”. 

Nokia is to be the major supplier of 4G and 5G radio access network (RAN) equipment to India’s Vodafone Idea (Vi) for the next three years. Vi, India’s third-largest operator, with about 216 million cellular connections and a market share of about 18.5%, announced last week that it has awarded contracts worth almost $3.6bn for its mobile network upgrades and expansion to Ericsson, Nokia and Samsung and, according to the Finnish vendor, it is getting the lion’s share of the business. Nokia says its “deployment will deliver premium connectivity to over 200 million Vi customers” and that it will “increase its market share and replace the incumbent vendor in Chennai and Andhra Pradesh, making it the largest supplier covering circles that generate more than 50% of Vi’s revenue.” Nokia also noted in this announcement that Vi is to deploy the vendor’s NetGuard Endpoint Detection and Response product to “strengthen” its network security. Read more.    

Nokia is boasting of its position as a major supplier of data transport technology to the global internet exchange provider (IXP) community, noting in this press release that it is a supplier of IP routing, optical networking and security products to more than 20 IXPs, “including six of the world’s 10 largest, based on both peak traffic and number of members”. Vach Kompella, senior VP and general manager of the IP Networks business at Nokia, stated: “As the nerve centres of the internet, the world’s largest IXPs are host to every type of traffic and customer, and in response they have reset expectations around networking innovation – driving the highest levels of uptime, reliability and security with Nokia solutions. We are proud to be the leading provider of networking infrastructure solutions for these critical organisations.” To coincide with its chest-thumping, Nokia has just announced that it has been selected by the Brazilian Network Information Center (NIC.br), the largest IXP operator in the world, to provide its IP routing equipment to “increase the performance and reliability of Brazil’s internet infrastructure” and “support NIC.br’s mission of interconnecting the Brazilian internet ecosystem and enable its expansion and reliability.”   

– The staff, TelecomTV