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A Look at AT&T’s Plans for DIRECTV’s Latin American Operations

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DIRECTV’s Latin American operations

During the Deutsche Bank Media, Internet, & Telecom Conference held on March 9, 2016, John J. Stephens, AT&T’s (T) chief financial officer and executive vice president, talked about DIRECTV’s (DTV) Latin American operations. Stephens said, “Our DTV Latin American properties, we are you know still just seven months in, what we found is demand trends are good, the teams are good, the products are good and they’re operating in a really difficult economy and a difficult generally speaking, political environment.”

He also added, “So we’re focused on, getting the operations to operate as effectively as possible to generate a self sustaining or more cash flows and we’ve been successful with that, and that’s we will keep focused on.”

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Currency impact

As you can see in the above chart, Brazil and Argentina were the top two contributors to the revenue of DIRECTV’s Latin American operations in 4Q15. DIRECTV’s Latin American operations had revenues of ~$1.2 billion during the quarter. This revenue stream continued to be impacted by currency. According to AT&T, YoY (year-over-year) revenue from these Latin American operations, without the contribution from Puerto Rico, decreased by ~28.7% in 4Q15.

Additionally, according to the company, this revenue stream would have risen ~15% YoY without the impact of currency. Earlier in 3Q15, the revenue from these Latin American operations had fallen ~25% YoY. The component’s revenue would have grown ~18% YoY without the currency impact during that quarter.

For diversified exposure to select telecom companies in the United States, you may consider investing in the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.4% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of December 2015.

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