DirecTV Loses 84,000 Net New Subs in Q2

Latin American Unit Also Shows Weakness
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Subscriber losses mounted for DirecTV in the second quarter as the satellite giant reported net new customers disconnections of 84,000 in its U.S. operations and its high growth Latin American division showed  increasing signs of weakness.

DirecTV reported 84,000 net new subscriber disconnections in the second quarter, above the 59,000 disconnections it reported in the same period last year. But perhaps more telling is that growth at its Latin American division, the bright spot at the satellite giant especially since its U.S. business has matured, is beginning to wane.

DirecTV Latin America reported  165,000 net new subscribers in the period, almost one-fourth of the 645,000 additions it reported in the second quarter of 2012.

The declines in Latin America were primarily due to higher churn, particularly in Brazil, where the company said in June it terminated about 200,000 subscribers  due to the improper crediting of customer accounts.  Challenging economic and competitive conditions in Brazil also contributed to the declines.

"While everyone is wringing their hands about the U.S., it is increasingly Latin America we need to worry about,” wrote Moffett Research principal and senior analyst Craig Moffett in a research note. “Today’s results from DTV LA suggest that a fundamental reassessment of growth prospects may be in the offing.”

DirecTV stock was down 2.3% ($1.46 each) to $61.82 per share in early trading Thursday.

Overall revenue increased 7% to $7.7 billion and operating profit before depreciation and amortization increased 4% to $2,1 billion. In the U.S., revenue rose 5.5% to $5.9 billion and OPBDA increased 4% to $1.65 billion. DirecTV Latin America saw revenue rise 12% to $1.69 billion and OPBDA tick up 2% to $455 million.

"While macro-economic and operational challenges in Latin America impacted our results, particularly in Brazil, contributions from successfully executing on DirecTV U.S.' long term strategic imperatives combined with our share repurchase program drove solid revenue, earnings per share and free cash flow in the quarter," said DirecTV chairman and CEO Mike White in a statement.

DirecTV is scheduled to hold a confercen call with analysts later today at 2 p.m.