Liberty gets go-ahead to buy AT&T’s assets, but must divest some B2B operations
The U.S. Department of Justice gave its consent to Liberty Latin America’s acquisition of AT&T’s wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands but required Liberty to sell off certain B2B operations that are part of their footprint in Puerto Rico.
Liberty Latin America expects a preliminary court order in the next few days allowing them to close on the transaction with AT&T on Oct. 31, the company said in a press release.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit last week in the U.S. District Court for the District of Columbia to block the proposed merger, stating that “the combination of Liberty and AT&T would leave many customers with only one alternative and others with no competitive choice at all, likely resulting in increased prices and lower-quality services for enterprise customers across Puerto Rico.”
At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the department’s complaint, which also stated that “competition between Liberty and AT&T has resulted in lower prices and higher-quality services for these customers.”
“The merger, as originally structured, would have eliminated competition for critical fiber-optic-based telecommunications services that businesses in Puerto Rico rely on every day,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Today’s settlement will ensure that businesses throughout Puerto Rico continue to benefit from vigorous competition in the provision of these services.”
To meet the conditions in the consent judgment, Liberty Latin America has entered into an agreement to divest part of its B2B operations in Puerto Rico through a deal with WorldNet Telecommunications Inc.
Specifically, the settlement requires the sale of:
- The fiber-based Columbus network in the metropolitan San Juan area that Liberty acquired as part of its purchase of Cable & Wireless Communications in 2016;
- Additional fiber assets, including fiber facilities and indefeasible rights of use, on Liberty’s network across the rest of the island;
- Retail fiber-based enterprise customer accounts served by Liberty today, with limited exceptions;
- The right to pull fiber through Liberty’s conduit and attach fiber to Liberty’s telephone poles; and,
- An option to purchase segments of AT&T’s aerial fiber-based core network.
“The divestiture will place WorldNet in the position to become a strong competitor in the provision of fiber-based connectivity and telecommunications services to enterprise customers throughout Puerto Rico,” the Department of Justice said in a release.
This divestiture is expected to close “promptly, pending appropriate regulatory approval,” which is not expected to affect the closing date for Liberty Latin America’s acquisition of the AT&T assets.
“We didn’t expect this condition, but we’ve always believed in fair and healthy competition, and we will comply with all of the DOJ’s requirements,” said Naji Khoury, CEO of Liberty Puerto Rico, in a statement.
“We will also work closely with WorldNet to ensure a smooth transition for the customers and employees who will be transferred,” he said.
“WorldNet has an excellent 20-year track record in Puerto Rico and is a customer-focused company dedicated to the B2B segment and has been recognized as one of the best employers on the island,” Khoury added.
Under terms of the agreement with Liberty, AT&T will retain FirstNet responsibilities and relationships as well as DIRECTV and certain global business customer relationships. After closing the deal, Liberty Latin America will support AT&T’s FirstNet build in Puerto Rico and the U.S. Virgin Islands, the company said.