AT&T to Sell Majority Stake in Central European Media Enterprises for $1.1B to Pay Down Debt

Budapest, Parliament building, Danube River - H 2015
Jim Engelbrecht / Newscom

AT&T acquired its stake in CME when it acquired Time Warner, now WarnerMedia, in 2018.

AT&T said Sunday that it has agreed to sell its majority stake in Central European Media Enterprises for $1.1 billion to pay down debt.

The stake will be sold to an affiliate of the Czech investment firm PPF Group N.V. AT&T got the stake in the company, which operates networks in Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia, when it acquired Time Warner, now known as WarnerMedia.

Under terms of the agreement, AT&T will receive $1.1 billion in cash at close and will also be relieved of a $575 million debt guarantee. The sale is "consistent with AT&T’s plans to monetize non-strategic assets as it continues to pay down debt," the company said. "Given the company’s confidence in reaching a net debt-to-adjusted EBITDA ratio in the 2.5x range by the end of this year, shareholders should expect that share buybacks will be in the mix in the fourth quarter of 2019, along with continued de-levering."

AT&T has been promising investors to reduce its debt via the sale of non-core assets, such as Central European Media (CME). CME said earlier this year that it was conducting a review of strategic options, including a potential sale of part or all of the company.

Time Warner first bought a stake in CME in 2009, acquiring 31 percent for $242 million. It later raised that stake.

Activist investor Elliott Management recently acquired a big stake in AT&T and has been pushing the company for strategic changes and divestments to boost its stock price. While it stopped short of demanding specific noncore assets that it would like to be sold off beyond DirecTV, it suggested several candidates, including Central European Media Enterprises.

AT&T is set to report its third-quarter earnings Monday morning and unveil details of its upcoming HBO Max streaming service on Tuesday.

PPF’s acquisition of CME is expected to be completed during second-quarter 2020, subject to regulatory approvals.