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AT&T Strikes Two Deals in Effort to Reduce Debt

February 28, 2001|From Associated Press

Rapidly chiseling away at its mountain of debt, AT&T Corp. has struck two separate deals to sell its 10% stake in Japan Telecom Co. for $1.35 billion and some cable TV systems in four states for about $2.2 billion.

The transactions, unveiled Tuesday, will help reduce AT&T's debt to about $42.5 billion, down from a peak of $62 billion in the fall. Credit agencies warned AT&T to reduce its debt load when the company announced plans to split into three independent companies.

The Japan Telecom stake is being sold to Vodafone Group, giving the British wireless company 25% of Japan's third-biggest phone company.

The deal comes three months after AT&T aligned itself with a different Japanese carrier, selling 16% of its wireless business for $9.8 billion to NTT DoCoMo, Japan's top mobile phone company.

Separately, AT&T also announced an agreement to sell cable systems serving about 840,000 basic subscribers in Georgia, Illinois, Iowa and Missouri to Mediacom Communications Corp.

Mediacom, based in Middletown, N.Y., will more than double its customer base with the acquisition, serving 1.6 million cable subscribers in 23 states.

The sale would leave AT&T Broadband with about 15 million cable TV subscribers across the nation.

The Mediacom deal doesn't have any bearing on the current three-way stalemate among AT&T, AOL Time Warner Inc. and the Federal Communications Commission regarding AT&T's vast cable holdings.

The FCC has ordered AT&T to bring its ownership of cable systems below the government limit by selling its 25.5% stake in Time Warner Entertainment.

However, talks to sell the stake to AOL Time Warner have reportedly bogged down over AOL's desire to include new distribution agreements for its programming over AT&T cable systems.

Meanwhile, AT&T also has filed to spin off Liberty Media Corp., a holding company for interests in major programming companies. . Shares of AT&T rose $1.07, or 5%, to close at $22.91 on the New York Stock Exchange.

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