Why AT&T Cancelled the Vrio IPO



IPO withdrawn at the last minute

AT&T (T) withdrew the planned IPO (initial public offering) of its Vrio unit just hours before the new stock was scheduled to begin trading on the New York Stock Exchange. AT&T said its decision to cancel the Vrio IPO was based on current market conditions, but it didn’t elaborate on that statement.

Vrio primarily consists of DIRECTV’s Latin America business. The operations under Vrio, which include satellite and cable television services, produced $1.4 billion in revenues in 4Q17.

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IPO size and price had been slashed

It appears that tepid investor interest in owning a stake in Vrio led AT&T to cancel the IPO. AT&T was initially looking to sell 29.7 million shares in Vrio, and it had indicated an IPO price of $19.00–$22.00. However, the IPO size was later reduced to 15.0 million shares, and its price was reduced to $16.00–$17.00, according to a Reuters report.

The rise of online video services such as Netflix (NFLX), Hulu, and YouTube TV (GOOGL) is eating into traditional pay-TV subscriptions. This trend led major pay-TV providers such as AT&T, Verizon (VZ), Dish Network (DISH), and Comcast (CMCSA) to lose millions of customers last year. Perhaps the challenges facing traditional pay-TV providers contributed to low investor interest in Vrio shares and ultimately led to AT&T pulling the IPO at the last minute.

Paying down debt

Funds raised through the Vrio IPO were expected to go toward paying down AT&T’s debt. The company’s debt stood at $126.0 billion at the end of 2017. Its debt is expected to rise, as AT&T is borrowing to finance its proposed acquisition of Time Warner (TWX).


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