Brazil Encourages Local Manufacturing

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Rio De Janeiro, Brazil -- In an effort to reduce the
country's reliance on imported pay TV equipment, the Brazilian government is offering
financial incentives to encourage foreign firms to set up local manufacturing facilities.

Brazil's state-owned National Economic and Social
Development Bank (BNDES) is talking with several foreign vendors about building factories
in Brazil, either on their own or with local partners.

"We will soon announce our first project, which will
be a cable plant located in the south or southern area of Brazil," said Paulo Roberto
Melo, BNDES' electronic-sector manager.

Melo estimated that the bank will provide loans of about
$400 million to foreign manufacturers over a two- to three-year period, but this figure
could go higher, depending on the demand for credit.

BNDES intends to reduce local pay TV operators'
dependence on imported equipment. They currently buy about 50 percent to 60 percent of
their equipment and parts from abroad. But BNDES hopes to see plants in Brazil that will
make cables, decoders, nodes, taps and cable modems.

A BNDES study foresees rapid growth in Brazil's pay TV
sector. Of the country's 37 million TV households, there are only some 2.6 million
pay TV subscribers. But in six years, this number is expected to grow to anywhere from 12
million to 16 million subscribers, according to BNDES.

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