Following the mixed third-quarter 2012 financial results, we
maintain our long-term Neutral recommendation on
). 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
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
Liberty Global Inc.
), 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
DIRECTV (DTV): Free Stock Analysis Report
LIBERTY GLBL-A (LBTYA): Free Stock Analysis
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