AT&T remains confident of midyear close
Despite countless delays, AT&T’s pending $48.5 billion acquisition of DirecTV looks to remain on track as the companies filed extensions on the “termination date” of the planned deal as it has now passed the one-year mark since it was initially announced.
In a filing with the Securities and Exchange Commission, DirecTV noted that both companies have filed an extension for a “short period of time to facilitate obtaining final regulatory approval required to close the merger.”
The transaction, which was announced last May, currently sits at Day 170 out of a potential 180-day Federal Communications Commission review process, a date it has been stuck on since the FCC stopped the review process in mid-March. There is no word on when the review process will restart, although AT&T has recently said it expects the deal to close by midyear.
While a similar deal between Comcast and Time Warner Cable was scuttled late last month due to regulatory pressure, the AT&T-DirecTV deal looks to be on more solid footing as it would not produce dramatic consolidation across a single operating segment. Also, AT&T said it would commit to expanding broadband coverage to 15 million rural homes; continue to offer a standalone broadband service providing at least 6 megabits per second speed “where feasible” in current markets at a fixed priced for three years; continue offering a standalone DirecTV service for at least three years; and continue its commitment to net neutrality efforts.
More importantly for the wireless industry, AT&T said it remains committed to spending at least $9 billion in the government’s planned 600 MHz incentive auction scheduled for next year if there is sufficient spectrum made available for a nationwide 20 megahertz footprint. AT&T recently shelled out more than $18 billion tied to winning bids in the FCC’s Auction 97 proceedings.
AT&T’s confidence in the proceedings were highlighted last month when the operator raised $17.5 billion in a bond offering to help pay for the deal. The bond offering, which The Wall Street Journal said was the second largest of the year, calls for the deal to close by Nov. 30 or AT&T must redeem a hefty portion of the notes “at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest to, but excluding, the redemption date.” The Wall Street Journal cited an investor following the sale as stating the bond offer drew approximately $68 billion in orders, suggesting a positive reaction to the offering.
The pending deal is also seen as influencing Verizon Communications’ recent announcement that it wanted to acquire AOL for $4.4 billion. Verizon said that AOL will boost its LTE wireless video business, its “over-the-top” video offerings and will create “a growth platform from wireless to [‘Internet of Things’] for consumers and businesses.”
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