The deal, which was finalised on Sunday, boosts AT&T's TV and video business, and gives DirecTV a presence in the broadband market.
The news follows rumours of AT&T's interest in the company, which first emerged at the beginning of this month.
"This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes," said Randall Stephenson, CEO of AT&T, in a statement.
"DirecTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business."
The agreement will create a direct competitor to a merged Comcast and Time Warner Cable, a deal which was announced in February this year. Analysts are predicting that the AT&T deal – which will see the carrier gain DirecTV’s 20?million US subscribers – will face similarly intense regulatory scrutiny.
The deal is expected to be completed in the next 12 months and still needs to be approved by DirecTV shareholders and various regulatory bodies.
DirecTV has 18 million pay TV customers in Latin America and AT&T intends to sell its 9% stake in América Móvil in an effort to assuage regulatory concerns in the region.
