Rio De Janerio, Brazil -- Globo Cabo S.A., Brazil's top
MSO, has slashed its churn rate and boosted sales, the company said in its recent
third-quarter results.
The advances come as the country's pay TV market gains back
some of the ground it lost during a brutal recession.
Globo Cabo said it reduced its quarterly churn rate to 15
percent in the third quarter from 25.1 percent in the second quarter. The MSO added 36,000
new subscribers in the third quarter, compared to a decrease of 1,900 subscribers during
the second quarter.
The company said it sees the positive trend continuing in
the fourth quarter.
Globo Cabo is also cleaning up its balance sheet. Debt fell
slightly to $584 million in the third quarter, from $595 million the prior quarter.
That's good news to Brazil's National Bank for Social and
Economic Development (BNDES), which in November agreed to invest $200 million in Globo
Cabo.
"The company has growth potential, and its share price
is going up," said a BNDES spokesman.
Indeed, Globo Cabo's New York-traded American depository
receipts traded above $8 recently -- after trading as low as $1 earlier this year.
Salomon Smith Barney Inc. analyst Whitney Johnson in late
November upgraded Globo Cabo to buy, with a 12-month price target of $9.75, noting that
its broadband network covers some of Brazil's wealthiest areas. Globo Cabo's shareholders
-- Organizaçoes Globo, Microsoft Corp. and Banco Bradesco -- also bode well for
the company.
Separately, Globo Cabo CEO Moysés Pluciennik has said that
the MSO continues to look for a major telco partner, though he declines to provide names
of potential suitors.
In early November, Globo Cabo said it would issue
additional shares to Microsoft and Bradesco, and that it would refinance some debt.
"Globo Cabo's situation has improved considerably over
the past months. It has managed to attract new investors, which brought money to the
company and eased its debt problem," said Petronio Cançado, a fixed-income analyst
for local investment bank Pactual.
