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January 17, 2008 |
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NET SERVICOS: S&P Assigns BB Rating on US$200-Mln Sr. Debt Issue Standard & Poor's Rating Services has assigned its 'BB' senior unsecured debt rating to NET Servicos de Comunicacao S.A.'s new US$200 million, 10-year senior unsecured debt issue. The new issuance will mostly fund the acquisition of pay-TV assets operating under the brand name BIGTV. NET Servicos entered into an agreement to acquire BIGTV in December 2007, pending regulatory approval from Agencia Nacional de Telecomunicacoes. BIGTV operates in 12 cities in the states of Sao Paulo, Parana, Alagoas, and Paraiba, areas that are either adjacent or new to the company's own coverage area and that further enhance its geographic presence. The acquisition of BIGTV will be paid in cash free of debt, and the final price will depend on the time frame for the company to get regulatory approval. With the acquisition of BIGTV, NET Servicos will add annual revenues of approximately US$60 million, 107,000 pay-TV, and 56,000 broadband subscribers to its base, reaching a market share of 48% and 18%, respectively. After NET Servicos incorporates BIGTV and adds Globosat's channels into the company's programming, S&P expects BIGTV to report EBITDA margins similar to those of the company. The ratings on NET Servicos reflect the challenging and competitive business environment, particularly with large telecom operators entering the pay-TV industry, which enhances their product offering; somewhat limited growth potential of pay-TV services in Brazil because of the ample reach of open-air television and income constraints; and heavier capital expenditure requirements on digitalization and bidirectional networks. These negatives are partly offset by the company's leading position in the Brazilian pay-TV industry, supported by an extensive cable network in major cities; a high-quality lineup; and the company's competitive triple-play offer. Telefonos de Mexico S.A.B. de C.V.'s (BBB+/Stable/--) presence brings operational expertise in telecommunications services and offers some degree of financial flexibility. NET Servicos also has prudent financial policies and moderate debt levels. Headquartered in Sao Paulo, Brazil, NET Servicos de Comunicacao -- http://Nettv.globo.com/NETServ/br/home/indexNet.jsp?id=1 -- is a subscriber TV multi-operator in Brazil, as it operates the NET brand in major cities, including operations in the 4 largest cities: Sao Paulo, Rio de Janeiro, Belo Horizonte and Porto Alegre. NET also offers Broadband Internet services through its NET VIRTUA brand name. |
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