AT&T Inc. T -0.36% said it agreed to sell its Vrio satellite business in Latin America to Argentina’s Grupo Werthein, continuing the Dallas telecom giant’s move away from the television business.
The sale covers 10.3 million subscribers across 11 countries in the Western Hemisphere, including Argentina, Chile and Colombia, inherited from AT&T’s purchase of DirecTV. The wireless carrier said the sale will trigger a $4.6 billion accounting charge, which includes $2.1 billion tied to “accumulated foreign currency translation adjustments.”
AT&T is slated to report quarterly earnings on Thursday.
An AT&T spokesman said the transaction carries an enterprise value of $500 million, which will be paid over the next few years. The companies expect to close the deal in early 2022.
Vrio has struggled with challenges unique to its home turf, including foreign-exchange rate swings and economic downturns in key markets including Brazil, where the unit holds a controlling stake in satellite-TV service Sky Brasil. The company previously wrote down its operations in Venezuela, where diplomatic tensions with the U.S. threatened the business.
Vrio’s DirecTV customer base hasn’t declined as quickly as its counterpart in the U.S., where high-speed internet access has allowed tens of millions of customers to cut the pay-TV cord in exchange for less-expensive online alternatives. In a statement, Grupo Werthein said it plans to invest in the business to meet its viewers’ needs. The family-controlled conglomerate holds stakes in a range of businesses in Argentina and other Latin American countries.
AT&T is leaving the entertainment sector as it sharpens its focus on wireless and broadband service. The company in February struck a deal to sell a 30% stake in its U.S. pay TV operations to private-equity firm TPG while giving up operational control of the business, which will be called DirecTV upon closing. The companies assigned that deal an enterprise value of $16.25 billion, which included about $6.4 billion of debt.
AT&T bought DirecTV’s entire satellite operations in 2015 for about $49 billion, or $66 billion including acquired debt.
AT&T Latin America chief Lori Lee said the sale will allow the company to focus more on core telecom services.
“We remain committed to Latin America through our wireless business in Mexico and services for multinational corporations operating in the region,” she said.
Write to Drew FitzGerald at [email protected]
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Appeared in the July 22, 2021, print edition as ‘AT&T to Sell Vrio Satellite Business In Latin America.’