DirecTV Brazil growth slows
May 6, 2015
By Chris Forrester
DirecTV’s usually reliable growth numbers for its Latin American divisions has shown slower growth in the quarter to March 31st. Its Sky Brazil market added just 41,000 net new subs for the quarter (although Gross additions were 589,000), and this is well down on last year’s net 109,000.
The slower growth was also reflected in revenue changes, with overall revenue of $795 million ($939 million a year ago), and not helped by a 2 per cent fall in ARPU.
The company said that the economic situation in Brazil is not helping. The company said it would start adopting local currencies in Latin America, especially in high inflation markets.
Across all of DirecTV’s Latino assets the broadcaster added a gross 1.1 million additions during the quarter year.
CEO Mike White stated: “Our main headwind in the quarter, as you saw in the release, was Sky Brazil where significant [22 per cent] depreciation in the [Brazilian Real] as well as some billing system migration issues caused a drag on our consolidated results.”
Bruce Churchill, DirecTV’s EVP and president of its Latin America operation, admitted that the broadcaster had implemented a major billing system migration, “and to be frank it did not go well. During the quarter we discovered a number of bugs which resulted in the billing system not communicating properly with the customer care and conditional access systems. These bugs were not identified during the testing phases and only came to light as we were migrating a large number of subscribers to the new system.”
Mike White added: “Latin America, as is the case with virtually every other global company that I watch, we’ve seen increased volatility in the global currency markets this year, which has presented significant foreign exchange headwinds for us particularly in Brazil and Colombia in the latest quarter. As such, we’ve increased our focus on our strategy to manage these countries in local currency by ensuring smart pricing with inflation, particularly in the high inflation countries, also maintaining a keen eye on costs so we can protect our margins and reviewing all of our capital expenditures carefully, particularly those that have to be made in US dollars to ensure that each investment will generate a solid and attractive return.”