AT&T Asset Sales: What Would They Indicate?

AT&T apparently has told investors and analysts it would consider selling its tower network – or stakes in America Movil if needed – to continue paying its dividend, or buying back stock. The point is that AT&T has lots of options where it comes to running its business, meeting the needs of customers and also satisfying investors. 

Neither move – selling towers or selling international assets – would be unprecedented.  In fact, there’s some excellent logic to the practice of selling towers.

It’s not hard to argue that those assets are at the core of what a mobile service provider has to do to sell more effectively and operate at lower costs. 

In fact, T-Mobile USA and Sprint have sold tower assets. Other carriers, such as Saudi-owned PT Axis Telekom Indonesia, have also sold off tower networks. The sale of tower assets seems to be a global trend.

Similarly, lots of service providers have bought out of territory assets, and then sold those assets to raise cash and reduce debt. Most service providers in Europe with out-of-market assets are thinking about it, or are doing so.

In most cases, such sales are for purposes of reducing debt.

Nor are tower sales, or disposing of international assets, the only steps service providers are taking. VimpelCom has signed a five-year managed services contract with Ericsson that has Ericsson managing network operations on VimpelCom's behalf at more than 10,000 sites.

The deal suggests network operations are not viewed as a core competency by VimpelCom. It isn’t that the network is unimportant; it is simply not the unique source of perceived value.

Likewise, Reliance Communications signed a similar deal with Alcatel-Lucent in India. Such developments might have been unthinkable back in the monopoly era of telecommunications. 

The point is that lots of activities, many would have argued are "core" operations for a tier-one service provider, might not actually be that important. 

Under some other circumstances, it might not have mattered whether tier-one service providers conducted some operations internally, or outsourced or rented the supply of those functions. These days, with growing profit margin pressures, it does matter.

That also raises the broader question of what things a service provider must absolutely control, and which operations and activities are less crucial.