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Tag: AT&T DirecTV

  • AT&T DirecTV’s satellite woes

    AT&T DirecTV’s satellite woes

    MUMBAI: What happens when a DTH satellite turns rogue?

    Well, it has to be sent to the graveyard or junk orbit, which is 300 km above the geostationary orbit (35,786 km above the earth). That’s exactly what the AT&T-owned direct to home service provider DirecTV is dealing with. One of its satellites Spaceway-1 – located at 138.4 degrees west and built by Boeing –  has developed a malfunction in its batteries, which has put it in danger of exploding.

    The Boeing 702HP model spacecraft was functional from 2005 and had been providing high-definition TV services to US subscribers of DirecTV. It was later demoted to the status of a backup satellite. (Normally communications satellite have a life span of 14-16 years.)

    AT&T has now written to the Federal Communications Commission (FCC) seeking permission to allow it along with Boeing and Intelsat to deorbit and decommission the satellite between now and 25 February when the satellite would go into earth’s shadow or eclipse.

    It has told the FCC  that “Spaceway-1 suffered a major anomaly in December that resulted in significant thermal damage to its batteries.”

    The harm to the batteries is  grievous enough  to not support the pressure that would come on them were they to be switched on during the eclipse phase (the period when it enters the earth’s shadow and does not receive sunlight to charge its solar panels; currently the satellite is in the sunlight phase). However, AT&T confesses it cannot avoid switching on the batteries when it enters the eclipse phase as the satellite will not have enough power to be totally deorbited and decommissioned then. And if they are turned on there is a possibility of an explosion, which could possibly damage other satellites in the vicinity.

    AT&T has also informed the FCC that just raising the satellite to the graveyard orbit will take 21 days leaving it with just 7 days to vent out 73 kg of its propellant fuel which is nigh impossible. (For a satellite to be decommissioned it needs to discharge its fuel and normally, it takes two to three months for the task when the spacecraft reaches the end of its life.) Within the time period available to Spaceway-1 only a nominal portion of the fuel will have been removed. Hence, it has sought the FCC’s permission to waive off the complete propellant fuel venting requirement. “Authorising DirectTV’s emergency de-orbit operations will facilitate disposal of Spaceway-1 as safely as possible,” AT&T has pleaded.

    Obviously, AT&T and DirecTV are racing against a deadline. And the clock is ticking away. Hopefully, the Spaceway-1 will find its way to its final resting place in time.

  • AT&T-DirecTV deal draws mixed reactions from media analysts, shareholders

    AT&T-DirecTV deal draws mixed reactions from media analysts, shareholders

    NEW DELHI: The recent announcement about American telecom carrier AT&T making a $48.5 billion bid for DirecTV has led to heated debate both in the media in the United States as well as among shareholders, stock watchers and industry stakeholders.

     

    Some analysts are questioning if the deal is so fruitful then why companies like Apple, Verizon and Google never considered purchasing DirecTV.

     

    According to various reports in the media in the US, DirecTV shareholders are reportedly happy with the price and shareholder rights attorneys at Robbins Arroyo are investigating the proposed acquisition.

     

    DirecTV shareholders will receive $28.50 in cash and $66.50 in shares of AT&T stock for each share of common stock, for a total consideration of $95.

     

    Robbins Arroyo’s investigation focuses on whether the board of directors at DirecTV is undertaking a fair process to obtain maximum value and adequately compensate DirecTV shareholders, who were expecting more.

     

    The $95 merger consideration is significantly below the target price set by at least four analysts, including a target price of $100 set by analysts at Macquarie Group and Atlantic Equities.  The company’s comparable adjusted earnings per share beat analyst estimates in three out of its last four quarters, said Robbins Arroyo.

     

    DirecTV shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.

     

    AT&T has also been under attack from Fitch Ratings that has placed the ‘A’ Issuer Default Ratings (IDRs) and outstanding debt of AT&T and its subsidiaries on Rating Watch Negative. The company’s ‘F1’ short-term IDR and commercial paper rating has also been placed on Rating Watch Negative.

     

    Meanwhile, Fitch has placed the ‘BBB-’ IDR and outstanding debt ratings assigned to DirecTV Holdings on Rating Watch Positive. Approximately $20.8 billion of debt outstanding at DirecTV as of 31 March 2014 is affected by Fitch’s action.

     

    Fitch said AT&T’s acquisition of DirecTV will improve its financial flexibility owing to DirecTV’s strong free cash flows and the significant equity component in the transaction financing. The transaction also strengthens the company’s position in the video landscape, offering the potential to capitalise on trends for mobile video and over-the-top (OTT) video delivery. The acquisition also diversifies AT&T’s revenue stream.

     

    DirecTV’s video assets are complementary to AT&T’s operations, but the longer term strategic benefits are less clear and depend on the post-merger company’s ability to capitalise on emerging trends in the industry, Fitch said.

     

    But AT&T’s planned acquisition of DirecTV offers benefits in the form of a nationwide footprint for AT&T as a video over the top (OTT) and pay TV operator and ties in with the company’s already strong IPTV, broadband and wireless businesses, said Strategy Analytics.

     

    “The industry is at a turning point where fixed operators are under tremendous pressure from increasing costs but DirecTV is known for having a higher-end customer base, and the ARPU for the company reflects the premium service,” said Strategy Analytics service provider strategies director Jason Blackwell.

     

    Multi-play bundling is an important strategy for AT&T, indicated by the high number of its customers who subscribe to three and four services. Targeting high ARPU, premium customers with DirecTV plays well into AT&T’s strategy. Through this deal, AT&T is buying scale in Pay TV, premium customers for greater multi-play service adoption, and a nationwide footprint for quad-play services.

     

    AT&T will probably be able to integrate DirecTV spectrum and delivery mechanisms as well as OTT Video services even more rapidly if the new FCC Net Neutrality rules are adopted. “It looks as if AT&T has placed a major bet on this happening. These FCC rules could dramatically simplify the delivery of multi-device multi-service ‘multiplay’ bundles across fixed and wireless; and even stimulate innovation in fixed telco services based on mobile features,” said Sue Rudd, director, Service Provider Analysis for Wireless Networks and Platforms.

     

    America Movil has no plans to buy any significant portion of AT&T’s stake, according to a report from Bloomberg. A public sale of AT&T’s 8 percent holding is seen as the most likely scenario. Such a secondary offering could let America Movil owner Carlos Slim and his family add to their personal stakes if they choose.

     

    Fortune reported that AT&T’s $49 billion agreement to buy DirecTV is a promise to build and enhance high-speed broadband for 15 million U.S. customers, many of whom live in rural areas that can be difficult to reach at a viable cost.

     

    The $48.5 billion deal could fall apart if the satellite-TV company is unable to renew its NFL Sunday Ticket service, a premium package offering access to all out-of-market games for $39 per month.

     

    Football could play a decisive role in the megamerger. The breakup provisions stipulate that AT&T would be able to litigate and potentially collect damages if DirecTV fails to use “it’s reasonable best efforts to obtain such a renewal” of NFL Sunday Ticket, according to a filing with the Securities and Exchange Commission, said a Business Week report.

     

    Meanwhile, Infonetics Research has reduced its 2017 pay-TV revenue forecast by 35 per cent globally, from $401 billion to just under $260 billion. It said the overall video services ARPU and revenue growth will be constrained. 

     

    “This is because of the result of increasing competition from OTT (over-the-top) players and the service providers themselves using broadband video as a lower-priced offering,” said Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics Research.