AT&T today formally shed another asset as it continues to slice off pieces of the business it cobbled together via mega acquisitions starting in 2015. The company said it completed the sale of its majority stake in Central European Media Enterprises for $1.1 billion in cash to Czech investment firm PPF Group.

It’s a small piece of an unwieldy pie. 

The incremental unraveling of AT&T, an issue forced by activist investors amid a mountain of debt it accumulated to purchase DirecTV and more recently Time Warner, got underway last fall and will continue through 2022.

AT&T’s new CEO John Stankey has effectively downplayed previous efforts to position the company as a media behemoth and leaned more heavily on its legacy business in telecommunications, particularly its mobile and fiber networks. 

That de-emphasis and increased willingness to part with business holdings no longer viewed critical, including DirecTV, its advertising unit, video game business, and Latin America business, comes amid questions about its wherewithal to participate in the upcoming mid-band spectrum auction.

“AT&T needs more mid-band spectrum to keep pace in 5G with T-Mobile and Verizon,” analyst at MoffettNathanson wrote in a new research note. “We won’t go as far as to say that AT&T can’t meaningfully participate in the C-Band auction given the state of their balance sheet, but well … it will be hard if they can’t find something to sell.”

The analysts added that AT&T will face difficulties even if it can shed more assets. “It simply isn’t clear where AT&T will find the borrowing capacity to buy a competitive-sized block of spectrum,” the firm wrote. 

Other changes at AT&T are also afoot, including a series of job cuts and AT&T retail store closures. The company has closed or announced plans to close 570 mobile retail stores since the beginning of the year, effectively shrinking its carrier-owned retail footprint by almost one-third since 2019, according to MoffettNathanson. 

AT&T previously said it planned to cut $1.5 billion in labor-related costs this year and has since hinted at even deeper job losses.

MoffettNathanson warns that it’s unclear if AT&T brass determined a significant part of its portfolio to be “strategically superfluous” or if “there is something more urgent afoot.” One possibility, according to the firm, is that “AT&T is desperately trying to raise cash lest they be sidelined for what many would describe as an existentially important C-Band auction in December.”

AT&T’s ability to grow its wireless business is being challenged by the maturity of the market and continued momentum at T-Mobile US, according to MoffettNathanson. “It would be a potentially devastating blow to their long-term competitiveness if their stretched balance sheet prevents them from acquiring more mid-band spectrum,” the analysts wrote.

The firm estimates that Verizon will have to spend up to $20 billion on spectrum licenses in the upcoming mid-band auction to keep pace with T-Mobile US’ significant spectrum advantage. But, it adds “AT&T’s position is worse,” noting that even a complete sale of DirecTV could yield just a quarter of what it paid to acquire the satellite-TV provider five years ago and less than what the firm expects Verizon to spend in the C-Band auction.

“Without a large block of mid-band spectrum to compete with T-Mobile and Verizon, AT&T’s mobility segment could fall behind for a generation,” the firm concluded.