AT&T Broadband is preparing to leave the Ma Bell mother ship carrying billions of dollars less debt after unloading nearly 3 million customers in the past 18 months.
In a single day last week, AT&T closed on deals that sent about 760,000 subscribers to other major cable operators. The deals with Charter Communications, Comcast and Mediacom Communications raised $2.6 billion that will go toward reducing AT&T Broadbands $15.6 billion debt.
Over the past year and a half, AT&T has sold properties with 4 million subscribers, while acquiring 1.4 million. The goal of the deals, in addition to reducing debt, was to improve clustering efficiencies in major urban markets, according to AT&T spokesman Steve Lang.
In St. Louis, for example, AT&T surrendered the market to Charter, which is based there. "Charter gains significant operational and technical efficiencies in the St. Louis metropolitan area, a top-20-ranked U.S. cable market," said Jerry Kent, president and CEO of Charter.
According to the companys first-quarter reports, AT&T remained the nations largest cable operator with 15.9 million subscribers. During that quarter, revenue per customer climbed 10.8 percent to $51.56 as the company continued to roll out new services.
Meanwhile, the legal issue of whether AT&T controls too much of the cable market is growing increasingly irrelevant as the company prepares to divest itself of its 25.5 percent stake in No. 2 cable operator Time Warner Entertainment as well as a 28 percent stake in Cablevision.
By the end of the year, AT&T Broadband will be listed as a tracking stock in preparation for a full-scale spin-off next year. The move follows the spin-off of AT&Ts wireless unit this week. As a part of the spin-off, AT&T shareholders were allowed to exchange their shares for shares in the wireless company or retain shares of the parent company. Shareholders will receive 0.32 share of Wireless for each AT&T share. In August, AT&T will complete the spin-off of Liberty Media, a John Malone-led holding company acquired with cable giant Tele-Communications Inc. in 1999.