Phone companies America Movil (AMXL) SAB, Telefonica SA and Oi SA (BRTO4) will see growth opportunities in Brazilian pay TV, as regulators predict a more-than threefold percentage increase in homes paying for service in 10 years.
In a decade, 80 percent of households will have a pay-TV service such as satellite or cable, up from 24 percent of Brazil’s 55 million homes today, said Joao Batista de Rezende, president of Brazil’s telecommunications regulator known as Anatel.
Expansion of the middle class and newly approved regulations, along with lower prices and expanded offerings, will fuel growth, he said.
America Movil, Telefonica and Oi, which already offer satellite service in Brazil, can expand in the pay-TV market after legislation last year allowed both domestic and foreign phone companies to offer cable. Satellite operators will likely provide the greatest competition, Rezende said.
“With the reduction of technological costs, the possibility of tax exemptions for equipment, and income growth, there are several positive factors driving the process,” Rezende said in a March 28 telephone interview in Brasilia. “On top of that you have the opening of the pay-TV market to phone companies.”
Brazil’s government published new regulations to govern cable, satellite and Internet video in the federal gazette March 28. With that step, Anatel can move forward this month with the approval of 600 requests for licenses the agency has had under review, some for almost 10 years.
Reduced Fixed Costs
Pay TV has “strong growth potential” for phone carriers since they already have potential clients among their subscribers, said Leonardo Nitta, a telecommunications analyst at Banco do Brasil SA. (BBAS3) Phone companies already have the infrastructure to offer TV service, reducing their fixed costs and giving them an advantage over new entrants who have to start from scratch, he said.
Brazil, Latin America’s largest economy, lags behind its regional neighbors in pay-TV adoption. In Mexico, the second- biggest economy, about 40 percent of households have a cable or satellite subscription, according to government data. In Colombia, it’s about 32 percent.
America Movil’s Net Servicos de Comunicacao SA unit and DirecTV (DTV)’s Sky Brasil Servicos Ltda are the nation’s largest pay- TV companies, with 85 percent of the market, according to Anatel data from February.
America Movil, Globo
America Movil, based in Mexico City, has shared control of Net Servicos with broadcaster Globo Comunicacoes e Participacoes SA and can take full command of the cable carrier under the new law, Anatel ruled in January. Globo also has a 7 percent stake in Sky Brasil.
Telefonica (TEF) Brasil SA, the local unit of the Madrid-based carrier, said in October that it plans to take control of cable- TV carrier TVA. Oi will offer TV over its phone lines for high- end customers, Chief Financial Officer Alex Zornig said in October. All three phone carriers already sell satellite-TV service.
Pay-TV subscriptions will expand 30 percent this year, equaling last year’s growth, Rezende said. After that, he expects 20 percent annual growth over the next four years, he said.
“It will be very good penetration, putting us in the same category as developed countries in five years,” he said. The government is studying tax incentives for network infrastructure spending to encourage investment, he said.
bloomberg.com
In a decade, 80 percent of households will have a pay-TV service such as satellite or cable, up from 24 percent of Brazil’s 55 million homes today, said Joao Batista de Rezende, president of Brazil’s telecommunications regulator known as Anatel.
Expansion of the middle class and newly approved regulations, along with lower prices and expanded offerings, will fuel growth, he said.
America Movil, Telefonica and Oi, which already offer satellite service in Brazil, can expand in the pay-TV market after legislation last year allowed both domestic and foreign phone companies to offer cable. Satellite operators will likely provide the greatest competition, Rezende said.
“With the reduction of technological costs, the possibility of tax exemptions for equipment, and income growth, there are several positive factors driving the process,” Rezende said in a March 28 telephone interview in Brasilia. “On top of that you have the opening of the pay-TV market to phone companies.”
Brazil’s government published new regulations to govern cable, satellite and Internet video in the federal gazette March 28. With that step, Anatel can move forward this month with the approval of 600 requests for licenses the agency has had under review, some for almost 10 years.
Reduced Fixed Costs
Pay TV has “strong growth potential” for phone carriers since they already have potential clients among their subscribers, said Leonardo Nitta, a telecommunications analyst at Banco do Brasil SA. (BBAS3) Phone companies already have the infrastructure to offer TV service, reducing their fixed costs and giving them an advantage over new entrants who have to start from scratch, he said.
Brazil, Latin America’s largest economy, lags behind its regional neighbors in pay-TV adoption. In Mexico, the second- biggest economy, about 40 percent of households have a cable or satellite subscription, according to government data. In Colombia, it’s about 32 percent.
America Movil’s Net Servicos de Comunicacao SA unit and DirecTV (DTV)’s Sky Brasil Servicos Ltda are the nation’s largest pay- TV companies, with 85 percent of the market, according to Anatel data from February.
America Movil, Globo
America Movil, based in Mexico City, has shared control of Net Servicos with broadcaster Globo Comunicacoes e Participacoes SA and can take full command of the cable carrier under the new law, Anatel ruled in January. Globo also has a 7 percent stake in Sky Brasil.
Telefonica (TEF) Brasil SA, the local unit of the Madrid-based carrier, said in October that it plans to take control of cable- TV carrier TVA. Oi will offer TV over its phone lines for high- end customers, Chief Financial Officer Alex Zornig said in October. All three phone carriers already sell satellite-TV service.
Pay-TV subscriptions will expand 30 percent this year, equaling last year’s growth, Rezende said. After that, he expects 20 percent annual growth over the next four years, he said.
“It will be very good penetration, putting us in the same category as developed countries in five years,” he said. The government is studying tax incentives for network infrastructure spending to encourage investment, he said.
bloomberg.com
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