AT&T | Representative image
American telecom major AT&T is in discussions to sell its loss-making ad unit to India’s InMobi, Axios reported on July 20 citing unnamed sources.
According to sources, the world’s largest telecommunications firm is scrambling to get Xandr, its ad division, off its balance sheet. The ad unit is losing tens of millions a year and has been grossly mismanaged by AT&T. Reports say that talks are ongoing and could fall through.
Senior ad industry executives have opined that since the unit's financials are in disarray, AT&T may consider the fire sale a success if it can get at least $1 billion for the unit.
ALSO READ: AT&T set to end media voyage with $43 billion Discovery deal
As per rough estimates, Xandr brings in $300-$380 million in revenue annually and loses between $50 million and $90 million, depending on how losses are accounted for.
Apart from this, sources say that Xandr has been mismanaged and neglected by AT&T following the departure of several high-level officials. Despite Xandr's good tech team, the execution misfired which has led to AT&T's top management giving up on ad tech, the sources added.
According to industry sources, Xandr deal could give InMobi, India's largest ad tech firm, more scale at a fire sale price.
Under the leadership of then CEO Randall Stephenson, AT&T built Xandr as a way to bring more automation to TV advertising. However, without the data and inventory from AT&T's media units, which are being spun off, Xandr's platform is not worth all that much.
Earlier, Xandr made most of its money from transactions it facilitated on the sell-side internally on behalf of AT&T, monetising WarnerMedia properties and DirecTV addressable ad inventory.
The company has been trying to sell the unit for months. Several strategic buyers and private equity firms looked at the asset and passed, including Microsoft, Roku and Mediaocean.