Inter Acquisition Aims For Scale

Strong Potential For Expansion
Pay-TV Subscriptions ('000) & Penetration (%)

Venezuelan pay-TV operator Inter has announced the acquisition of Chile-based pay-TV operator TuVes . Inter, which has around 21% of Venezuela's pay-TV market , will see its footprint expand to four new countries, rapidly building its position as a regional player. TuVes and Inter already had a distribution agreement from 2012 making the merger a logical step. BMI believes a stronger regional player will offer greater competition in Latin America's pay-TV sector.

A Venezuelan company investing outside its market is not a common occurrence. Fixed-line incumbent CANTV was considered a candidate for fellow incumbent CNT in Ecuador but there has been little additional action. Inter's more international outlook may come from its owners, which include US private equity firm HM Capital Partners and French incumbent France Telecom . Inter offers pay-TV services to around 700,000 subscribers, also packaging broadband and fixed-line options with its network reaching 1.2mn households.

TuVes offers pay-TV in Chile, Peru, Paraguay and Bolivia over satellite platforms . The company had high ambitions of reaching more markets in the region, but has not expanded further than its H111 exploration beyond Chile. Inter also offers pay-TV services using satellite technology.

Pay-TV is an increasingly important product in the telecoms market as mobile growth has passed its peak and broadband expansion is unlikely to reach the heights of mobile growth. BMI expects pay-TV services to continue offering strong growth prospects, particularly with low-priced product s entering the market and operators innovating with prepaid services and basic packages. Pay-TV penetration in the markets in which Inter now operates is still relatively low, highlighting the opportunities for growth.

However, BMI believes that IPTV and video on-demand services will offer the greatest potential, as these services offer greater flexibility and monetisation opportunities . The pay-TV market is increasingly crowded, which is the most likely cause of the decision to merge operations. A larger player will have greater bargaining power over purchasing content, savings that can be passed on to the end user. As the market becomes more crowded, pricing will be a major differentiator for new subscribers.

This article is tagged to:
Sector: Telecommunications
Geography: Venezuela, Bolivia, Chile, Peru, Paraguay

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