AT&T Completed the DIRECTV Acquisition in 2015



AT&T’s DIRECTV acquisition

In this series, we will look at some significant events and developments AT&T (T) experienced in 2015 and beyond. Let’s start with AT&T’s acquisition of DIRECTV (DTV) on July 24, 2015.

At the completion of this transaction, the equity value of DIRECTV was ~$47.1 billion and its net debt was ~$15.9 billion. For each share, DIRECTV shareholders received 1.892 shares of AT&T and ~$28.50 in cash consideration.

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AT&T’s pay-TV base after the DIRECTV acquisition

As we can see in the above chart, AT&T’s domestic video subscriber base increased significantly in 3Q15 after the DIRECTV acquisition. After this deal, AT&T’s pay-TV subscriber base in the US bypassed Comcast’s (CMCSA) (CMCSK) subscriber base. AT&T became the largest player in this metric and Comcast was the second most significant.

At the end of 3Q15, AT&T had ~25.4 million pay-TV subscribers in its domestic operations. Meanwhile, Comcast had ~22.3 million pay-TV customers. The third largest player in this metric in the US was Dish (DISH), with ~13.9 million subscribers at the end of 3Q15.

Time Warner Cable (TWC) followed Dish with ~11 million pay-TV subscribers at the end of that quarter. Note that Verizon (VZ) had ~5.8 million FiOS video subscribers at the end of 3Q15.

Instead of investing directly in AT&T’s stock, you may take a diversified exposure to the telecom company by investing in the iShares MSCI USA Minimum Volatility ETF (USMV). USMV held ~1.5% in the telecom company at the end of November 2015. Telecom stocks made up ~3.8% of this ETF on the same date.


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