Spanish telecom giant Telefonica has acquired a stake in TVA, the cable TV arm of Brazil's largest magazine publisher Grupo Abril, according to a BNAmericas.com report.
The report said that for an undisclosed sum, Grupo Abril agreed to sell its preferred shares and some of its voting shares in TVA, which served the cities of Sao Paulo, Rio de Janeiro, Curitiba and Porto Alegre.
TVA had canceled plans for an initial public offering first proposed in September, the report said.
Brazilian law restricted Telefonica, as a foreign-owned telco, from owning a controlling stake in a local cable TV operator. But Grupo Abril referred to the deal as a partnership and would maintain operating control of TVA, the report said.
TVA reported a net loss of 150 million reais ($69.9 million) in 2005.
Created in 1991, the company now has some 320,000 cable subscribers and more than 60,000 broadband Internet customers.
'In terms of strategy, it makes sense (for Telefonica to acquire a cable company),' Felipe Cunha, an analyst at Banco Brascan, was quoted in the report as saying.
There were clear objectives to improve the growth of its products for clients such as voice and data, as well as TVA's products, he said.
At the same time, the move was also made to protect Telefonica's clients from competition, especially Net Servicos and Vivax, which had already started to attack 60% of Telefonica's clients in the social group A and B, Cunha said.
Net Servicos, part of Mexican telecom group Telmex, was also awaiting approval for acquisition of a 36.7% controlling stake in Vivax.
Telefonica awaits approval for the TVA acquisition from the national telecom regulator Anatel, according to the report.