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11/02/2024 05:37:50 pm

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AT&T Buys DirecTV for US $50 Billion

AT&T has officially agreed to buy DirecTV for nearly US $50 billion, ending months of negotiations that will boost the telecom giant's customer base and raise its ability to compete with Comcast-Time Warner Media, US press reported on Monday.

The mammoth merger, approved by the board of directors of the two companies on Sunday, will launch the Dallas-based AT&T deeper into pay TV and will further increase its customers by offering wireless, voice, data, TV and home security.

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It was the second time this year that two telecom giants in the United States have announced they are merging. In February, Comcast and Time Warner Cable agreed to merge, in what industry analysts believe was born out of the telecom companies' desire to control content and delivery and amass customers.

AT&T, which announced that it will buy DirecTV for US $95 per share with the total transaction's value reaching about US $67.1 billion, if DirecTv's debt is included, will be able to increase its ability to compete against Comcast, the current number one in the industry.

AT&T said its merger with DirecTV could improve its Internet service by sending its existing TV subscribers into video over satellite service, which, as a result, will free up bandwidth on its telecommunications network.

AT&T has 5.7 million U-verse TV subscribers while DirecTV has 20.3 million customers in the United States. That means the merger will serve around 26 million customers, making AT&T-DirecTV the second-largest pay TV operator behind Comcast-Time Warner, which will serve 30 million customers when the merger is approved by regulators.

The companies expect the deal to close within 12 months following a government review. AT&T, however could face regulatory hurdle before the US $50-billion deal is approved as consumer groups immediately criticized the deal. Unions said the industry currently needs more competition and not more mergers.

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