EchoStar, Vivendi Break Off Talks for Joint Venture in Brazil

Vivendi’s GVT to go its alone, building its Brazilian telco, pay TV biz

U.S. satellite service giant EchoStar Corp, and Brazil-based telco Global Village Telecom (GVT), a subsid of France’s Vivendi, have nixed talks to create a joint pay TV venture in Brazil.

Confirming the end to talks in a brief statement Friday, Vivendi stated that it would now pursue pay-TV growth in Brazil on its own.

Announced in October, the EchoStar-GVT partnership would have seen EchoStar yoking its Englewood satellite transmission technology with Vivendi’s communications network, giving EchoStar a foothold in the market and allowing Vivendi national coverage for its GVT pay TV service.

GVT’s operations are currently limited in Brazil to 146 cities and towns. As a telco, owned by Vivendi from 2009, GVT has focused on rolling out its high-tech fixed-line telco service in Brazil, offering pay-TV – where all subscribers receive HDTV – as part of a triple-play package.

“GVT has the cost structure of a telco, so each additional subscriber has to generate enough revenue to justify the cost of connection. It’s not like a satellite company where the cost of adding new clients is very low,” said Francois Godard, at Enders Analysis.

Limited in its geographical reach, GVT total pay TV subs, 530,000 June-end 2013, pale in Brazil before those of both the Carlos Slim-owned America Movil (9 million subs) and DirecTV (5.2 million). GVT also lags behind Rio de Janeiro-based Oi (889,900).

Partnering Mexican company MVS Comunicaciones, EchoStar co-owns Dish Mexico, which has run up 2.3 million subs in five years.

The end of talks with EchoStar raises the question of what future there is for GVT in a new-look Vivendi that is restructuring as a media company based around its Canal Plus and Universal Music Group (UMG) assets.

“We don’t think the future of GVT is within the Vivendi group. It looks to be in the consolidation of the Brazilian pay-TV market,” Godard said.