Telefónica buys further into Brazilian cable

Juan Pablo Conti ©RapidTVNews | 05-10-2011

Less than three weeks after Brazil lifted restrictions on the participation of foreign telcos in the domestic pay-TV
business, Telefónica has acquired half of TVA, one of the country's most promising cable operations.

With a market share of less than 2% of the Brazilian pay-TV business, TVA might be trailing market leaders Net Serviços, Sky Brasil and Via Embratel by a long way. However, this small MSO – whose cable network started being rolled out in São Paulo in 1994 – has built up a reputation for being one of Latin America's most ambitious and innovative players.
Back in 2004, TVA made others take notice when it became Brazil's first cable operator to launch a digital TV service. Two years later, the company joined the likes of BSkyB in Britain by offering viewers pioneering high-definition broadcasts of the 2006 FIFA World Cup. Today, TVA's 100 Mbit/s wideband Internet access service is probably the fastest in the region from a cableco.
Prior to the latest transaction, Telefónica had owned a minority, 19.99% stake in TVA since 2007. That was the maximum percentage of shares that national regulations allowed for a telco looking to add cable TV services in a same state (in this case São Paulo).
While in May of this year a change in the law eliminated such threshold, the restrictions remained in place for foreign telcos – hence the Spanish giant was left with its hands tied. But then in August the Senate passed the PLC-116 resolution (signed into law by president Rousseff in September), which ended these restrictions, too.
Telefónica has now taken advantage of the new regulatory landscape and bought an extra 30% into TVA, boosting its ownership in the company to 49.99%. The shares were acquired from Grupo Abril, which held the remaining 81.01% interest in the joint venture.