Still Neutral on DIRECTV - Analyst Blog
December 06 2012 - 11:20AM
Zacks
Following the mixed third-quarter
2012 financial results, we maintain our long-term Neutral
recommendation on DIRECTV Inc. (DTV). The company
continues to generatehuge net customer addition in Latin America,
increased ARPU in the U.S., and higher operating margin and
OPBDA.
However, its net subscriber
addition in the U.S. market has slowed down during the last four
quarters. Management cited stricter credit standards and reduced
promotional discounts are the primary reasons for soft net
subscriber addition in the U.S. DIRECTV is desperately trying
to establish itself as a premier pay-TV operator targeting
high-quality subscribers.
Management is confident that it
will be able to achieve its long-term financial goals in 2013
without any setback. Nevertheless, competitive threats to the
pay-TV industry and slow economic growth are the near-term
concerns. In the reported quarter, DIRECTV added a net total of
67,000 subscribers in the U.S. compared with 327,000 net subscriber
additions in the year-ago quarter.
DIRECTV is looking for an option to
acquire Vivendi SA’s subsidiary unit Global Village Telecom (GVT) –
a Brazilian telecom carrier. GVT offers voice, broadband and pay-TV
service in Brazil. At present, DIRECTV is Brazil's No. 2 pay-TV
service provider. The company will generate enormous synergies if
it becomes successful to acquire GVT by offering bundled voice,
broadband, and high quality pay-TV services in Brazil. Alongside,
DIRECTV, other major bidders for GVT are America Movil
SAB (AMX), Liberty Global Inc. (LBTYA),
and a private equity group. Bloomberg reported that bid offers for
the first round were more than $7.76 billion each.
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report
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