American telecom carrier AT&T is likely to announce its DirecTV deal on Sunday. The likely value of the deal is around $50 billion.
The merger, which is subject to regulatory approvals, will create a new pay-television giant in the United States.
Media reports says the boards of AT& and DirecTV are meeting today.
As per the deal, AT&T will pay in the mid-$90s per share for the satellite-television provider DirecTV.
Last month, Comcast announced a $45 billion agreement to buy Time Warner Cable to create an entity with 30 million video subscribers. They are yet to receive regulatory approval.
A deal for DirecTV, No. 1 U.S. satellite TV operator, would give AT&T almost 26 million pay TV subscribers and a national footprint in the business. The $50 billion valuation for DirecTV is on a higher side, analyst said earlier.
The No. 2 U.S. cellular operator, which also has some TV and broadband services, considers video delivery as core to its future.
Earlier, AT&T considered several attempts to buy big companies. Those include an abortive bid for T-Mobile USA in 2011, as well as a potential takeover of Vodafone, which receded as a possibility after Comcast announced its $45 billion bid for Time Warner Cable, Reuters reported.
AT&T’s acquisition would expand its customer base by 20 million for its U-verse fiber product, which provides television and Internet service.
The transaction may also allow current DirecTV customers to get Internet service where AT&T’s U-verse is available. DirecTV’s growth has been hurt because unlike cable companies, it is unable to offer broadband alongside its TV subscriber services. AT&T has about 10.4 million U-verse Internet customers in states such as California and Texas.
The main hurdle will be support from American regulators. The AT&T-DirecTV deal could enjoy a somewhat smoother ride than the Comcast-Time Warner Cable deal, though both are expected to ultimately win approval, Reuters reported.
AT&T and DirecTV may face questions about the areas where their TV services now overlap.
Gene Kimmelman, president of the public interest group Public Knowledge, said an AT&T-DirecTV deal would mean a loss of choice in video for about 25 percent of Americans but would allow the companies to compete more effectively with their more powerful rivals.
TelecomLead News Team
