Sao Paulo, Brazil -- Following a tough 1999, Globo Cabo
S.A., the country's top cable company, should see growth this year thanks to an
improving economic climate and solid internal restructuring, industry observers said.
Globo Cabo, controlled by Brazilian media giant
Organizaçoes Globo, did its homework last year, they added. Over the course of the year,
the company attracted new investors, restructured its debt, cut subscriber churn and
operating costs, launched a low-cost programming package and added a potential new source
of income by launching an Internet-access service.
"We expect the company's subscriber base to grow
moderately in 2000. It will not surge, but the base will definitely grow," said
Petronio Cançado, an analyst with local investment bank Pactual.
Investors -- especially bullish on Globo Cabo's
Internet potential -- have richly rewarded the company. Its New York-traded American
depository receipts, which fell to $1 each last March, were trading at $15.50 at press
time last Wednesday.
Globo Cabo ended 1999 with about 1 million subscribers,
roughly the same as at the end of 1998. The company's 18 local cable systems and one
wireless cable operation pass 4.9 million homes, and it could add about 300,000 new
subscribers this year, said Rubens Glasberg, publisher of Brazilian trade magazine Pay-TV.
Glasberg's estimate does not include potential new
subscribers the company could add through the purchase of new cable systems.
On the financing front, Globo Cabo completed a share issue
to new partners last month. It's also completing a bond issue. The deals will bring
the company about 843 million Brazilian reals ($465 million) in new capital.
The shares were issued to Microsoft Corp. and to
Brazil's national development bank, known as BNDES. They bring Organizaçoes
Globo's stake to about 80 percent from 62 percent, while Banco Bradesco S.A., the
country's biggest private bank, will maintain its 20 percent stake.
Globo Cabo is continuing to search for additional equity
investors in the telecommunications field. "We are now looking for a telephone
partner with international presence," CEO Moysés Pluciennik said. "We aim to
become Latin America's largest technology company."
A local media analyst who asked not to be identified
speculated that Globo Cabo is "aiming at a company the size of AT&T [Corp.] or
one of the U.S. Bell companies. I don't think they would go for a smaller partner or
for a player already established in Brazil, such as Telefónica [S.A.] from Spain."
Last month, Globo Cabo launched "Virtua," its
broadband Internet service. The company predicts that about 50,000 of its customers will
subscribe to Virtua over the next year.
The service, including rental of a cable modem, costs $61
per month, plus an installation fee ranging from $138 to $193. That compares with dial-up
Internet-access fees of as low as $11 per month.