AT&T and DirecTV's proposed merger has gained significant steam, the company said during its second quarter earnings call.
The deal has passed cleanly through antitrust regulators in Brazil and reviewing committees in three U.S. states, AT&T CFO John Stephens said to investors and analysts Wednesday.
The passage in Brazil is important for DirecTV, which is the largest satellite television provider in Latin America with around 18 million subscribers spread throughout the Central and South Americas. Brazil is one of the fastest growing Latin American economics and has shown a penchant for adopting new technologies. The largest economy in South America, Brazil is already a strong foothold for DirecTV and one that will become another market to conquer for AT&T.
DirecTV owns 93 percent of Sky Brasil, the largest satellite television provider in the country, and has a 41 stake in Sky Mexico. DirecTV also completely owns PanAmericana, which offers channels in Venezuela, Argentina, Colombia, Chile and Puerto Rico.
In fact, 95 percent of DirecTV's subscriber growth over the past few years comes from Latin America. The region, however, has yet to pay significant dividends, accounting for 20 percent of the company's revenue.
"DIRECTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business," AT&T CEO and Chairman Randall Stephenson said.
"DIRECTV's satellite platform's broad reach remains advantaged when compared with cable and telco in Latin America," reads a May press release. "Latin America has an underpenetrated pay TV market (about 40 percent of households subscribe to pay TV) and a growing middle class, and is DIRECTV's fastest growing."
The almost-$50 billion deal is currently undergoing regulatory scrutiny to ascertain whether the merger would have harmful effects such as higher prices on the consumer. Three U.S. states -- Louisiana, Arizona and Hawaii -- have also gone through the deal and not suggested any changes. When AT&T announced its intention to acquire DirecTV, the company stated, "The merger is subject to approval by DIRECTV shareholders and review by the U.S. Federal Communications Commission, U.S. Department of Justice, a few U.S. states and some Latin American countries. The transaction is expected to close within approximately 12 months."
Lawmakers are in the midst of reviewing a Comcast-Time Warner merger as well, and face the near certainty of reviewing another merger between Sprint and T-Mobile. Still, AT&T believes that it has a shot at getting regulatory approval.
"This is not Comcast/Time Warner, this is not two cable companies getting together, this is not Sprint and T-Mobile," Stephenson told a House Judiciary Committee panel in June.
"We're putting (DirecTV's satellite) TV product with our broadband wireless product. ... There is not a content player per se in this transaction."
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