AT&T selling ad unit to Microsoft

Carrier ends its online advertising effort with Xandr deal, said to be valued at $1 billion.

AT&T Inc. agreed to sell its Xandr division to Microsoft Corp., a long-expected divestiture after the carrier decided digital advertising wasn’t central to its operations.

The transaction gives customers on Microsoft’s properties, such as MSN, access to Xandr’s marketplace for automated online advertising, the companies said Tuesday in a statement that didn’t disclose financial terms.

The deal is valued at about $1 billion, according to people familiar with the matter who asked not to be identified discussing nonpublic information.

AT&T has been seeking a buyer for Xandr for more than a year after giving up on its dream of becoming a major player in online ads — an area in which tech companies such as Google and Facebook dominate.

The sale is part of a broader portfolio reshuffling after AT&T shifted its DirecTV operations to a joint venture with TPG, and its WarnerMedia unit is slated to merge with Discovery Inc. and become a new independent company.

Shares of Dallas-based AT&T rose 1.2% to $24.47 on Tuesday; Microsoft, based in Redmond, Wash., advanced 2.3% to $327.29.

Xandr, whose name was inspired by Alexander Graham Bell, was formed in 2018 from AT&T’s ad businesses including AppNexus and AdWorks. The company said at the time that it hoped it would become a multibillion-dollar business.

But the digital advertising business is being shaken up as Apple Inc. and Google plan to do away with tracking cookies, making it harder for marketers to follow users’ online activity and tailor ads to them.

The Xandr sale is subject to regulatory review, the companies said Tuesday.