AT&T received $1.4 billion from the sale of its Hulu stake
AT&T (T) netted more than $1.4 billion from the sale of its stake in video streaming provider Hulu. AT&T sold its 10% stake in Hulu back to the business, leaving the Walt Disney Company (DIS) as the majority shareholder with a 60% stake. Comcast (CMCSA) owns a 30% stake in Hulu.
AT&T will use the proceeds from the sale of its Hulu stake to reduce its debt. AT&T has taken out loans to finance acquisitions, including its $85 billion purchase of WarnerMedia, leading its debt to balloon. AT&T’s long-term debt stood at $166.3 billion at the end of 2018 compared to Verizon’s (VZ) $113.1 billion long-term debt and Sprint’s (S) $36.3 billion long-term debt. T-Mobile’s (TMUS) long-term debt at the end of 2018 was ~$22.7 billion.
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AT&T is planning to divest its noncore assets
Besides Hulu, AT&T is planning on the sale of its other noncore assets to raise funds toward reducing its debt. While discussing AT&T’s fourth-quarter earnings results in January, CEO Randall Stephenson said that reducing debt would be one of the company’s top priorities in 2019.
In addition to reducing its debt, AT&T also wants to raise more funds to reinvest in its business to drive growth and return value to shareholders. For AT&T, 5G network development is an area that requires a big investment. Mobile operators are in a race to build 5G networks, as 5G promises to enlarge their revenue opportunities.