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AT&T moves ahead on 2 fronts

Telco plans swap with Charter Communications

NEW YORK — AT&T announced Wednesday that it has formally requested structural changes needed for a public offering of its 25% stake in Time Warner Entertainment.

Separately, the telco giant said it’s planning a major swap of cable systems with Charter Communications, the cable company owned by billionaire investor and Microsoft co-founder Paul Allen.

TWE must be converted from a limited partnership into a corporation in order to create equity securities with voting rights that can be registered with the Securities and Exchange Commission. AT&T said it has the right to make this request during periodic 60-day windows.

The telecom giant has been trying to extricate itself from TWE to fulfill regulatory conditions on its merger with cabler MediaOne Group. Ideally, AT&T wants its partner AOL Time Warner, which owns the other 75% of TWE, to buy it out. But the two companies haven’t been able to agree on terms. That’s why AT&T needed to make sure it has the option of selling the stake to the public.

Talks under way

However, AT&T said it will continue discussions with AOL Time Warner in hopes of reaching a negotiated settlement. The partners have agreed to suspend action on the TWE registration process until March 15 while they talk.

Meanwhile, AT&T’s broadband unit agreed to swap cable TV systems with smaller rival Charter Communications in a deal worth $1.8 billion.

AT&T will wind up with 62,000 of Charter’s cable subscribers in Florida plus $1.04 billion in cash and $500 million worth of Charter stock. The two cable systems it’s acquiring are valued at $249 million.

In exchange, Charter receives AT&T cable systems with about 574,000 subs in St. Louis and areas of California, Nevada and Alabama.

AT&T, which is paring down and rationalizing its various business as it prepares to split into four separate companies, may announce additional cable sales to Charter.

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