DirecTV (DTV:US), the largest U.S. satellite-TV provider, will take a pretax charge of $25 million after an internal investigation found that it had overstated subscriber numbers in Brazil by hundreds of thousands.
Beginning in 2012, some Sky Brasil employees improperly credited customer accounts to reduce or eliminate churn, the El Segundo, California-based company said in a filing. The number of Sky Brasil subscribers on December 31 was about 100,000 lower than previously reported to Brazilian regulators and 200,000 lower than cited on March 31, the company said.
DirecTV, which had considered buying Vivendi SA’s Brazilian phone and Internet unit before withdrawing from a bidding war in March, reported a record number of Latin American customers in the first quarter. Gross additions in the region jumped 14 percent to 1.2 million in the first quarter, driven by demand in Brazil, Argentina and Colombia.
Sky Brasil’s ongoing churn in Brazil will be higher than previously anticipated, the company said today. The $25 million expense covers capitalized installation costs and subscriber related equipment held by the terminated customers, according to the filing.
DirecTV fell 0.6 percent to $60.73 at the close in New York. The shares have advanced 21 percent this year, while the Standard & Poor’s 500 Index added 13 percent.
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