Growth, Reform Top Agenda at Brazils ABTA

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Sao Paulo, Brazil-Buoyant growth in Brazil's pay TV industry made for an optimistic tone at last week's annual meeting of the Brazilian Association of Pay TV and Telecoms (ABTA) here.

Talk at the show also centered around radical new pay TV rules and restructuring plans at TVA, the nation's No. 2 cable operator.

In step with a stronger economy expected to grow by 4 percent this year, Brazil's pay TV industry is showing signs of recovery. By year's end, Brazil is expected to have 3.5 million pay TV subscribers, up 17 percent from 2.9 million at the end of 1999.

By 2005, the pay TV universe is expected to comprise 6.5 million subscribers, according to figures released at the show by the independent media-research firm PTS.

Estimates from the National Telecommunications Agency (Anatel) were even more bullish.

"We can go far beyond the 6.5 million estimate," said Anatel president Renato Guerriero. "Anatel believes Brazil will have 16 million pay TV subscribers by 2005."

Anatel based its estimates on a significant number of new licensees entering the market. Nevertheless, its figures were cautiously received, as subscriber growth in Brazil has been wildly overestimated in the past and the new entrants are still tussling with several thorny issues.

For starters, many have delayed their launches from six months to a year as they argue with electric companies over pole-attachment rights. And many pay TV operators are also hampered by a high tax burden, said TVA technology and new-business director Alexandre Annenberg.

Annenberg, who is also the president of ABTA's board, said taxes "account for 40 percent of subscription fees, which limits an operator's ability to invest."

On the regulatory front, Anatel plans to bring the different rules currently governing all technologies-such as cable, wireless, and direct-to-home satellite-under the rubric of pay TV. The reform, dubbed the Mass Electronic Regulation Service (Scema), is expected to be in place by year's end.

However, there are no plans to abolish foreign-ownership laws that restrict overseas companies from making more than a 49 percent investment in cable systems, but place no such limits on wireless and DTH providers.

"Foreign companies will not be allowed to own more than 49 percent of the shares of cable operators," confirmed Jarbas Valente, Anatel's director of communications.

Separately, TVA president José Augusto Moreira told conferees that his MSO, owned by Brazilian publishing giant Grupo Abril, would continue its strategy of unloading its programming assets.

The company is negotiating the sale of its 100-percent-owned Eurochannel, a network that features European films and series. It is also selling its 24 percent stake in HBO Brasil, the nation's second largest pay-TV programmer.

TVA may also divide itself into two companies along technological lines, Moreira said, creating stand-alone firms for cable and multichannel multipoint distribution service.

Grupo Abril, where Moreira is vice president, has sought to sell its controlling stake in TVA for the past two years. There was talk of concluding a deal in June, though Moreira said that is now unlikely until the end of this year.

Explaining the adjusted deadline, Moreira said that "the deal had been hampered by the 49 percent restriction of foreign ownership in cable."

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