Categories: Carriers, Featured, Finance, Global

With US $ 380 million of investments, Brazilian GVT launches pay TV

Two years after it was bought by French entertainment and telecoms group Vivendi, Brazilian carrier GVT announced on September 15 that it is investing US $380 million (R$ 650 million) through the end of 2012 to launch pay TV in the country. The move is an important departure for GVT, which until now was focused on providing fixed-telephony and broadband. “It is another market for us. Until now carriers that launched pay TV did that in order to reduce churn. Our vision is different. We see pay TV as another business unit, apart from telephony or Internet,” said CEO Amos Genish, during a press conference.

GVT expects that within five years revenues from TV may contribute more to the carrier’s business than telephony or Internet broadband. THe commercial launch is set for October, although some pilots are already happening in a ‘controlled environment.’ At first, GVT will sell pay TV in regions where it already has a presence, but the operator is open to entering new markets in the future where it does not currently offer telephony or broadband.

GVT can take advantages of Vivendi’s expertise. The entertainment and telecoms group owns Canal+ and SFR in France. SFR has a lot of experience in video on demand, offering about 10,000 titles to 2.7 million clients in broadband with VoD access and around 5 million clients on VoD for mobile phones. “We have a lot of synergy with them,” emphasized Genish.

GVT’s offering will feature service interactivity through a hybrid DTH-IPTV plataform and VDSL (very-high-bit-rate) and fiber to the home (FTTH) architecture, provided by Ericsson, Intelsat, Sagemcom, Telsinc, Triax and Philips. “Our hybrid model is the first one in Brazil and one of the pioneers in the world, and it allows interactive services. We believe in a connected house, with all devices connected through Internet,” said Genish.

Although he repeatedly mentioned the ‘anytime, anywhere’ concept, Genish didn’t give many details about bringing TV content to other devices. Asked about starting to enter the mobile segment, Genish said that is not expected, at least for the next two or three years.

Of the US $380 million (R$ 650 million), GVT plans to invest US $117 million (R$ 200 million) this year and the rest will be allocated in 2012. Since the Vivendi acquisition, GVT’s investments have increased in Brazil. Overall, GVT will invest US $5.85 billion in Brazil through 2016 and in 2011 GVT said that it will invest a total of US $1.05 (R$ 1.8 billion). “We are investing more than our cash flow this year. Our Ebitda will be US $819 million (R$ 1.4 billion), so we are taking money from Vivendi and [Brazilian Development Bank] BNDES,” explained Genish.

GVT’s revenue forecast for 2011 is US $2 billion (R$ 3.4 billion). Next year, the carrier plans to again invest more than its Ebitda, at a total of US $1.17 billion (R$ 2 billion). “There will also be a gap, but we believe break even to happen in 2013, and after that to maintain a positive cash flow,” Genish said.

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