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With AT&T, led by CEO John Stankey, having been in deal mode in recent months, Wall Street analysts asked various M&A questions on the telecom giant’s second-quarter earnings conference call on Thursday.
In May, AT&T agreed to the media mega-merger of entertainment arm WarnerMedia with Discovery after agreeing to sell a 30 percent stake in its pay TV business to private equity firm TPG. And on Wednesday, it unveiled a deal to sell Vrio, the Latin American arm of DirecTV, to Grupo Werthein, based in Argentina.
In a “pleasant surprise,” the TPG deal looks set to close in the coming weeks, “a little bit faster” than expected, Stankey said on the call, adding that all recent deals have better positioned all assets for growth despite some difficult decisions.
Stankey said the company wants “to hit a strong exit velocity” at DirecTV and WarnerMedia as their respective deals near, “at which point the combination with the right partner only expands the respective opportunities for success going forward.
Asked about updates on the Discovery deal, Stankey said there is none so far, adding that “no news is good news.” He added: “Right now it is a lot of work” on the regulatory review process, which the company continues to expect to take about a year, with nothing “particularly problematic” having emerged so far. The CEO also reiterated again that it was a fairly “straightforward” deal.
AT&T CFO Pascal Desroches signaled hope earlier this year that the timing guidance for securing clearance could prove somewhat conservative. Stankey said Thursday that if the Discovery deal closes earlier, “we will take it.”
One option of intrigue to Wall Street analysts and bankers has long been a potential deal with Charlie Ergen’s Dish. With AT&T on Monday announcing that it was replacing T-Mobile as Dish Network’s primary network services partner, some have wondered if the pact could increase the likelihood of a Dish merger with DirecTV or even AT&T proper down the line, for example.
Management didn’t address that sort of chatter, but Stankey said the deal was a chance to participate in Dish’s expected success and take revenue from a competitor, in this case T-Mobile, which used to be Dish’s partner. Dish likely felt “we could be a very capable and more capable partner,” Stankey said. Dish is going to be “successful, one way or another” and when a firm is doing well, “it is always nice for us to be successful along with them” in a financially accretive way.
And he signaled there could be additional opportunities to work together. “When you think about this relationship, a broader wholesale capability beyond just the wireless business is a part of this, which is … attractive to us as an infrastructure provider,” Stankey said. “And there are opportunities for us to think about, as Dish deploys network infrastructure where they go, for us to do some things that are complementary and helpful to both businesses.”
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