Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

DirecTV (DTV - Analyst Report), the largest satellite TV provider in the U.S., is planning to take part in Brazil’s 4G wireless broadband spectrum auctions, expected to be held in mid-June. We believe that by offering a by-product bundled service, DirecTV wants to exploit the under-penetrated pay-TV and wireless broadband market in Brazil.

DirecTV, which operates under the brand SKY Brazil, is among the six companies that have submitted bids for the auction. The other bidders include America Movil’s (AMX - Analyst Report) Claro, Telefornica’s (TEF - Analyst Report) Vivo, Oi S.A. ADS (OIBR - Snapshot Report), TIM Participacoes S.A. (TSU - Snapshot Report) and Sunrise Telecomunicacoes. DirecTV – already selling 4G wireless broadband services in the country’s capital, Brasilia – could bid for the spectrum in Sao Paulo, Rio de Janeiro (two biggest cities of Brazil) and other small cities where fixed line internet service is  unavailable.     

Brazil is a key market for DirecTV with the South American nation’s rising household income and an increased standard of living creating demand for pay-TV – one of the biggest growth drivers for the company. Brazil has nearly 14 million pay-TV customers, covering only 22% of the population, representing a widely under-penetrated market. The company wants to cash on to this opportunity to gain market share from cable TV rivals.     

Quality and quantity of fixed-line internet is not very high in the smaller cities of Brazil. Furthermore, poor terrestrial landscape and high build-out cost act as hindrances for internet service providers.

DirecTV wants to grab this opportunity by providing high speed internet service at affordable price. According to IDC, Brazil will have 4.7% of the world’s total smartphone market share, thereby providing growth opportunity for wireless services.

We believe that DirecTV can improve its ARPU and reduce its churn rate by offering both wireless and pay-TV services simultaneously. Moreover, the company’s failed bid with Verizon Communication Inc (VZ - Analyst Report) to launch 4G wireless broadband service in the U.S. is another prime reason to bid for the spectrum in Brazil. However, deepening economic uncertainty may act as a downside for the company, reducing the demand for 4G service in Brazil. 

Recommendation

We are maintaining our long-term Neutral recommendation on DirecTV. Currently, DirecTV has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%