DIRECTV to Exit GVT Buyout Bid - Analyst Blog
March 15 2013 - 5:50AM
Zacks
DIRECTV (DTV) –
the largest satellite TV operator in the U.S. has planned to move
out from Global Village Telecom’s (GVT) buyout proposal of nearly
€6 billion ($7.76 billion). Hence, withdrawing from the offer will
allow KKR & Co. LP to bid solely for the company.
In an effort to increase their
presence in emerging Brazilian markets, cable Multi Service
Operators (MSO) like Liberty Global Inc. (LBTYA)
and telecom giant America Movil (AMX) were all
eyeing for Vivendi SA’s subsidiary unit GVT – a Brazilian telecom
carrier.
GVT operates in 136 cities in
Brazil and offers fixed telephone, broadband and Voice over
Internet Protocol (VoIp) service to both business and normal
customers. The company started its new pay-TV service in Jan 2012,
indicating strong growth potential with 18.8% penetration rate
within its broadband subscriber group. Moreover, during 2012 the
company added 406,000 customers with an 11.4% Brazilian pay-TV
market share.
We believe, DIRECTV’s plan to
participate for bidding GVT assets will not only help them to gain
market traction but will also facilitate DIRECTV to counter stiff
competition, which exists in the Brazilian pay-TV markets.
Moreover, the company is one of the leading satellite TV service
providers in the country, so acquiring GVT’s broadband business
assets may further boost the company’s online channel viewing
options.
At the end of fiscal 2012, DIRECTV
had $1,902 million in cash and cash equivalents and $17,170 million
of outstanding debt on its balance sheet. A further acquisition of
$7.76 billion of GVT assets will increase the company’s
leverage.
Currently, DIRECTV carries a Zacks
Rank #3 (Hold).
Other Stocks to
Consider
Meanwhile, one can look
at Comcast Corporation (CMCSA), which
carries a Zacks Rank #2 (Buy).
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
LIBERTY GLBL-A (LBTYA): Free Stock Analysis Report
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