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AT&T buys DirecTV for nearly $49 billion

AT&T buys DirecTV
AT&T buys DirecTVby AT&T/att.com

Today, the telecommunication giant provider AT&T agreed to buy the satellite television company DirecTV for nearly $49 billion. DirecTV shareholders will get $28.50 per share in cash and $66.50 per share worth in AT&T stock. The acquisition will take approximately twelve months to complete due to regulatory authorities review. If approved by regulatory athorities, DirecTV will operate as an AT&T subsidiary and will keep its main operation at its current headquarters location in California. Also, DirecTV services will remain available for at least three years after the merger with its current branding.

This transaction will increase and strengthen AT&T's customer base at times in which industry competition is confusing and constantly changing. Taking that reality into account, AT&T will have a larger content control, delivery and footprint through the nation. AT&T customers can expect a wider array of services and bundled offers, which will augment services per customer ratio and boost company sales.

AT&T commitments when the deal closes

According to the AT&T announcement, the company commits to do the following when the deal closes:

  • 15 Million Customer Locations Get More High Speed Broadband Competition. AT&T will use the merger synergies to expand its plans to build and enhance high-speed broadband service to 15 million customer locations, mostly in rural areas where AT&T does not provide high-speed broadband service today, utilizing a combination of technologies including fiber to the premises and fixed wireless local loop capabilities. This new commitment, to be completed within four years after close, is on top of the fiber and Project VIP broadband expansion plans AT&T has already announced. Customers will be able to buy broadband service stand-alone or as part of a bundle with other AT&T services.
  • Stand-Alone Broadband. For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6 Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing.
  • Nationwide Package Pricing on DirecTV. DirecTV’s TV service will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers, no matter where they live, for at least three years after closing.
  • Net Neutrality Commitment. Continued commitment for three years after closing to the FCC's Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules.
  • Spectrum Auction. The transaction does not alter AT&T’s plans to meaningfully participate in the FCC’s planned spectrum auctions later this year and in 2015. AT&T intends to bid at least $9 billion in connection with the 2015 incentive auction provided there is sufficient spectrum available in the auction to provide AT&T a viable path to at least a 2x10 MHz nationwide spectrum footprint.

AT&T and DirecTV will host a conference call on tomorrow Monday, May 19, 2014 at 8:30 a.m. ET to discuss the acquisition.