AT&T is selling another of its content operations, this time in Latin America, as it looks to focus on the connectivity side of the business there, much like it is doing back home.
The US operator is offloading Vrio, which provides video services across a variety of platforms – DirecTV’s Latin American unit, Sky Brasil, and DirecTV Go – to Grupo Werthein for an undisclosed sum. However, the Wall Street Journal quoted a company spokesperson as saying the deal implied an enterprise value of €500 million, payable over a few years.
AT&T itself said it has taken an impairment charge of $4.6 billion on the value of the asset at 30 June.
AT&T acquired Vrio as part of its US$49 billion (or $67 billion including debt) DirecTV acquisition in 2015. It claims to have 10.3 million subscribers across 11 countries in Latin America and the Caribbean, although notes that the deal excludes its broadband operations in Colombia and AT&T’s interest in Sky Mexico.
The parties expect the deal to close early next year.
“This transaction will further allow us to sharpen our focus on investing in connectivity for customers,” said Lori Lee, CEO of AT&T Latin America. “We remain committed to Latin America through our wireless business in Mexico and services for multinational corporations operating in the region.”
If Lee’s comments sound familiar, that’s because they are. The LatAm chief executive is essentially echoing what group CEO John Stankey said two months ago, in the wake of the telco’s decision to merge its WarnerMedia business with cable channel Discovery.
That deal marked a stark turnaround for the telco, which had spent a number of years building up media assets, only to discover that content is a tough business and perhaps not as complementary to the telco side of things as it had anticipated.
And now it appears it is extending that strategy to Latin America too, concentrating specifically on the Mexican mobile market it entered in 2015 via the acquisitions of Iusacell and Nextel.
The US operator has perhaps not has as big an impact on the market as it would have liked. According to the Mexican regulator’s latest statistics – which admittedly date back to mid-2020 – AT&T has built up a share of 14.7% of the mobile market, leaving it behind Telefonica at 20.6%, and way behind dominant player America Movil, which still controls well over 62% of the market. Looking on the bright side, the Instituto Federal de Telecomunicaciones’ (IFT’s) numbers also show that AT&T ranks second in terms of mobile data connections, with just over 16% of the market, but America Movil’s dominance is even greater in this area.
It’s highly likely that AT&T will put some effort into serving multinationals in Latin America, as Lee intimated; those businesses are highly lucrative. But it is questionable whether it will really channel its energies into providing a shot in the arm for its Mexican ops. We could find that that business just keeps ticking over.