Brazilian antitrust agency Cade approves AT&T’s acquisition of DirecTV ‘without restrictions’

Brazilian newspaper Teletime reports that Brazil’s antitrust regulator the Administrative Council for Economic Defense (or Cade), has approved ‘without restrictions’ US telecoms operator AT&T’s USD48.5 billion takeover of Latin American pay-TV operator DirecTV, which has 18.1 million subscribers across the region. In order to gain regulatory approval for the deal, AT&T needed to relinquish its 8% stake in Mexican group America Movil (AM), which already controls mobile operator Claro Brasil, fixed line provider Embratel and cable operator Net Servicos in Brazil; the divestment was completed on 30 June this year.

Meanwhile, DirecTV Latin America owns 93% of pay-TV provider Sky Brasil. In its decision, Cade adjudged that the takeover will not result in any overlap or vertical relationship in Brazil. ‘The operation will not change the market scenario and does not trigger any competitive concern,’ the regulator said in the ruling.

As reported by TeleGeography’s CommsUpdate, on 18 May AT&T and DirecTV announced that they had entered into a definitive agreement under which AT&T will acquire the US and Latin American pay-TV provider in a stock-and-cash transaction with a total equity value of USD 48.5 billion and a total transaction value of USD 67.1 billion, including DirecTV’s net debt. The merger was approved unanimously by the boards of directors of both companies, and is now subject to approval by a raft of vested concerns, including the US Federal Communications Commission, US Department of Justice, certain US states and some Latin American countries. Nonetheless, the transaction is expected to close within approximately twelve months.

Through its subsidiaries and affiliated companies in the US and Latin American countries including Brazil, Mexico, Puerto Rico, Argentina, Colombia, Venezuela and Ecuador, DirecTV provides digital television services to over 20 million customers in the US and more than 18 million customers in Latin America. DirecTV also owns 4G wireless network operating licences in Latin American countries including Brazil (via Sky Brasil, licensed for 4G fixed-wireless broadband in São Paulo and Rio de Janeiro) and Colombia.

AT&T says the merger provides significant opportunities for operating efficiencies primarily driven by increased scale in the video segment, and expects cost synergies to exceed USD 1.6 billion on an annual run rate basis by year three after closing the deal. The telco adds the combined company will offer US consumers bundles that include video, high speed broadband and mobile services using all of its sales channels, including AT&T’s 2,300 retail stores across the country and thousands of authorised dealers and agents of both companies nationwide.