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Brazil’s pay TV boost

Subscriptions bring in stellar numbers

Brazil’s pay TV sector last year had its best performance since 2000. The country’s total sub base, including cable, satellite and other operators, reached about 4.5 million at the end of 2006, up 11% from the previous year, according to local research firm PTS.

The sub base increase is higher than the country’s 3% GDP rise in 2006 and shows that the sector has completely recovered from a major crisis in the period from 2001-03. Following a 17% rise in subs base in 2000, Brazilian top operators were nearly bankrupted due to a major devaluation of the local currency. Some operators, such as market leader Net Servicos, had to renegotiate debts and programming agreements in U.S. dollars.

Operators left the intensive care unit in 2004 and the sector grew 8% in 2005, pushed by the subs’ increasing interest for triple play (pay-TV, Internet broadband and telephone) packages.

This trend accelerated in 2006, when Net Servicos was particularly aggressive in the offer of triple play.

In fact, Net Servicos recently reported its pay TV subs base rose 17.6% to1.8 million in 2006, while the broadband base rose 98.4% to 727,000 in the period. The operator’s voice service, Net Fone, which was launched in March 2006, had 182,000 subs at the end of the year. The company offers Net Fone in partnership with local long-distance giant Embratel. The operator and Embratel have a common shareholder, Mexico’s telco Telmex.

Brazil’s pay-TV sector is expected to continue to grow this year above the country’s GDP expansion, said PTS general director Otavio Jardanovski.

A factor that may further positively impact the industry is the investment of Spain’s global telco Telefonica. A direct telephony competitor of Telmex in Brazil, Telefonica is following the steps of the Mexican group and has entered the Brazilian pay TV market.

Last year, Telefonica bought a stake in Brazil’s No. 2 cabler, TVA, and is expected to launch aggressive triple-play packages this year. Telefonica has also launched a pay TV satellite service last year in Sao Paulo state.

Even though the satellite service is already in operation on tentative basis, Telefonica still needs the approval of regulatory agency Anatel to become a pay TV operator.

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