Multiband Corp (MBND), DIRECTV (DTV): Is This Telecom Services Contractor Worth More Than You Think?

In its latest fiscal year, DIRECTV (NASDAQ:DTV) reported solid financial results, with increases in revenues and operating income of 9.2% and 9.9%, respectively, versus the prior year. The company’s sales growth benefited from net subscriber additions globally, especially in its Latin American unit, as well as from higher average pricing in the U.S. In addition, despite a perennial rise in programming costs, DirecTV achieved its highest operating margin of the past five years by driving efficiencies across its supply chain, including the use of third-party providers like Multiband.

Naturally, DISH Network Corp (NASDAQ:DISH) continues to try to use innovation to overtake the top satellite television provider spot, with roughly 14 million subscribers versus 21 million for DirecTV. In 2012, the company unveiled its latest DVR, the Hopper, which is capable of skipping through commercials and enabling the viewing of programming on broadband-connected mobile devices. During the period, Dish Network also launched dishNET, its high-speed internet product that is primarily geared for the segment of the population living in under-served rural markets.

In its latest fiscal year, Dish Network reported relatively weak financial results, with a 1.6% increase in revenues, but a 25.2% decline in adjusted operating income. While the company was able to reverse the prior year loss in its overall subscriber base, its profitability suffered from rising subscriber acquisition and programming costs. Like DirecTV, though, Dish continues to generated substantial operating cash flow that it is using to acquire wireless spectrum, which will ultimately allow it to provide more bundled services that are in demand from customers.

Multiband’s fortunes are heavily tied to DirecTV, the best operator in the satellite TV space and one that is investing in new services to strengthen and expand its customer base. As a major partner of the satellite TV giant, Multiband is positioned for future gains from this relationship, with possible additional upside from its business development activities outside of the satellite segment. While Multiband’s profitability is currently depressed as it builds secondary revenue streams, its growth opportunities are promising and investors should hold out for a better offer.

The article Is This Telecom Services Contractor Worth More Than You Think? originally appeared on Fool.com and is written by Robert Hanley.

Robert Hanley has no position in any stocks mentioned. The Motley Fool recommends DirecTV. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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