Telecommunications and media conglomerate AT&T (NYSE:T) has been trying to sell its operations in Puerto Rico and the U.S. Virgin Islands for the past few months as part of its ongoing efforts to pay down debt, which ballooned following its blockbuster acquisition of Time Warner that closed last year. Ma Bell has now reached a deal to sell off those businesses, which include both wireless and wireline operations, to Liberty Latin America (NASDAQ:LILA).

Here's what investors need to know about the asset sale.

AT&T headquarters

Image source: AT&T.

On track for 2019 target

AT&T said this week that the transaction will include roughly 1.1 million wireless subscribers, network assets, wireless spectrum, and real estate. Approximately 1,300 AT&T employees are also part of the deal. Liberty Latin America is paying $1.95 billion in cash, less than the estimated $3 billion that AT&T initially thought it could bring in.

"This transaction is a result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization," AT&T CFO John Stephens said in a statement. "But doing so only made sense if we received a fair value from a buyer that is committed to taking this well-run business, with its skilled employees and loyal customer base, and help it thrive."

So far this year, AT&T has already raised around $10 billion from asset sales, ahead of the $6 billion to $8 billion that it was targeting for 2019. The wireless carrier notes that this deal will bring that total to over $11 billion, even though the transaction is not expected to close for another six to nine months since it is subject to regulatory review.

T Total Long Term Debt (Quarterly) Chart

T Total Long Term Debt (Quarterly) data by YCharts.

The company continues to march toward its goal of reaching a net debt-to-adjusted-EBITDA ratio of 2.5 by year-end. That ratio stood at roughly 2.7 at the end of the second quarter, down from 2.9 at the end of 2018. AT&T says it will continue using free cash flow after dividends to keep exploring other "monetization initiatives."

Heeding Elliott's call

The announcement comes a month after activist investor Elliott Management disclosed that it had accumulated a $3.2 billion stake and said it would agitate for changes to maximize shareholder value. AT&T CEO Randall Stephenson has met with Elliott to discuss its ideas, but at an investing conference last month called the open letter to AT&T's board a "mixed bag."

In its thesis for "Activating AT&T," the hedge fund called on AT&T to continue unloading noncore franchises. "These include the well-known examples of its home security business, regional sports networks, CME, Sky Mexico, Latin American pay TV business (Vrio), Puerto Rican operations and many, many more," Elliott wrote. The institutional investor believes that the stock could be worth over $60 per share by the end of 2021 if the company pursues the proposed actions.