AT&T and Cox Communications Seal $2.85bn Deal, Fueling Cable Consolidation in the US

Strategic Insights -

In a move that continues the consolidation trend in the US cable sector, AT&T and Cox Communications have announced a $2.85bn deal, with Cox set to acquire AT&T's cable holdings in eight western cities and regions. The transaction sees Cox exchange 50.3m AT&T shares for AT&T's networks and cable holdings, as well as receive around $750m in "other considerations", including cash. This move reinforces AT&T's focus on concentrating its cable interests in the 25 largest metropolitan areas, while Cox's aggressive growth policy aims to accumulate clusters of networks in contiguous regions.

Key Takeaways:

  • The deal between AT&T and Cox Communications is valued at $2.85bn, with Cox acquiring AT&T's cable holdings in eight western cities and regions.
  • Cox will pay the equivalent of $4,230 for each subscriber to the AT&T networks, suggesting that cable asset values remain high even in smaller, less-densely populated cities.
  • The transaction sees Cox gain around 1.7m customers in Arkansas, Texas, Oklahoma, and Louisiana, with plans to integrate them into its existing systems in Oklahoma and Louisiana.
  • The move reinforces AT&T's strategy to concentrate its cable interests in the 25 largest metropolitan areas, with similar aims shared by Cox to accumulate clusters of networks in contiguous regions.
  • The deal marks Cox's third acquisition of the year, with the company committing to growth worth $8.25bn since April.
  • On completion, Cox expects to have around 5.5m subscribers and group revenues of $3.3bn next year.

Statistics:

  • $2.85bn: The value of the deal between AT&T and Cox Communications
  • 50.3m: The number of AT&T shares being exchanged for Cox's cable holdings
  • $750m: The amount of "other considerations", including cash, being received by Cox
  • 1.7m: The number of customers being acquired by Cox in Arkansas, Texas, Oklahoma, and Louisiana
  • $4,230: The equivalent value of each subscriber being acquired by Cox
  • 8: The number of western cities and regions being acquired by Cox
  • $8.25bn: The total amount committed to growth by Cox since April
  • 5.5m: The number of subscribers expected by Cox on completion of the deal
  • $3.3bn: The expected group revenues of Cox next year

Sources:

  • Financial Times Limited, 1999