Federal Judge OKs AT&T PR, USVI Sale to Liberty With Spins

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In a deal struck Thursday, a federal court okayed an agreement between AT&T and Liberty Latin America. A U.S. District Court Judge for the District of Columbia approved the sale of AT&T’s Puerto Rico and U.S. Virgin Island operations for close to $2 billion if certain assets are divested.

The case began in October 2019, when Liberty Latin America Ltd. agreed to buy AT&T’s wireless and wireline operations on those islands for $1.95 billion in cash. In the complaint filed by the Justice Department’s Antitrust Division, the DOJ said Liberty competes with AT&T for wireline customers in Puerto Rico over fiber optic networks they own there. Their enterprise customers are businesses of all sizes as well as institutions, such as universities, hospitals, and government agencies.

When the transaction closes, Liberty would take ownership of certain AT&T assets in Puerto Rico, including its wireless and wireline networks, wireless spectrum, contracts, real estate, and most of AT&T’s customer relationships on the island. Originally, the DOJ said the deal would lessen competition in that market for telecom services.

Thursday, Judge Trevor McFadden reached his proposed final judgement before taking testimony and without a trial. He stated the defendants agreed to make a divestiture to remedy the loss of competition alleged by the DOJ.

Liberty Latin America must divest its “Columbus Network” assets to an acquirer acceptable to the United States within 30 days. That is a fiber-based network in the San Juan metro that Liberty acquired in 2016.

“The divestiture must be made to an Acquirer that, in the United States’ sole judgment, has the intent and capability (including the necessary managerial, operational, technical, and financial capability) to compete effectively in the provision of fiber-based connectivity and telecommunications services to enterprise customers in Puerto Rico,” states Judge Trevor McFadden in the decision.

Those assets don’t include AT&T customers or Liberty customers who purchase video, hybrid fiber-coaxial, wholesale, or residential services.  

The Columbus Network assets include all rights-of-way, easements and access agreements, contracts and records related to accounts. All repair, maintenance and performance records are also to be part of the spin.

AT&T customers, meaning enterprise and wholesale customers in Puerto Rico, or Liberty customers who purchase video, hybrid fiber-coaxial, wholesale, or residential services are excluded from the assets to be sold. The deal excludes AT&T Global Services customers. The divestiture assets do not include any subsea cable or any connection rights to subsea cable. 

Within three years of the divestiture, Liberty must sell the acquirer “on a segment-by-segment basis, and on commercially reasonable terms to be approved by the United States in its sole discretion, each of the AT&T Aerial Fiber Core Segments,” according to the judgement. These segments connect AT&T’s communications hubs to each other across Puerto Rico. The deal excludes the segment between Arecibo and Ponce and the segments between or among Guaynabo, AT&T Plaza, Hato Rey, and Carolina.

By Leslie Stimson, Inside Towers Washington Bureau Chief

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