Caracas, Venezuela -- Hot on the acquisition trail,
Venezuelan cable operator Intercable expects 1998 to be a year in which it nearly triples
the number of cities where it operates.
The company's appetite reflects the fierce
consolidation across the cable industry here.
Consolidation is the name of the game in Venezuela, as the
country's big three MSOs -- Intercable, SuperCable and Cabletel -- vie for greater
national reach and market share.
Some half-dozen licensed cable operations in the country
have disappeared over the past year, mostly through buyouts, according to the Venezuelan
Chamber of Subscription TV. The roster includes Parabolicas Service, Citycable,
Ultravision, Parabolicas Caracas, Iecsa and Satvenca. And many small, largely unlicensed
companies have suffered the same fate.
Intercable has, perhaps, been the most high-profile MSO on
the expansion front recently.
At the beginning of this year, it was operating in seven
cities. It is currently in 15 cities, and it expects to be in 20 by year's end, said
Eduardo Stigol, Intercable's technical director.
"We've grown 100 percent in the last four
months," he added, referring to the company's geographic expansion.
The company has spread from its traditional central-valley
base of Barquisimeto to the Caribbean coast in the north and the Andes in the west, mainly
through buying out smaller players in areas not yet reached by its big peers. Its major
centers of operation are Valencia, Maracaibo, Maracay, Punto Fijo and the Andean city of
Mérida.
That growth has attracted international investors. In
February, Dallas-based private-investment firm Hicks, Muse, Tate & Furst Inc. -- along
with its Argentine unit, Grupo BGS -- bought an undisclosed equity stake in the operator.
Intercable would only describe the percentage as "significant."
SuperCable, Venezuela's biggest MSO, has chosen a
different strategy.
Focused on the capital of Caracas and on Puerto Ordaz in
eastern Venezuela, it is expanding by building its own networks, rather than by acquiring
them.
Meanwhile, Cabletel -- under its new managing director,
Alberto Scharffenorth, a former vice president at SuperCable -- has followed the buyout
route. It has gobbled up smaller companies so that it currently covers Venezuela from
Caracas to the west, as far as Maracaibo and San Cristobal -- two areas where Intercable
operates.
Venezuelan cable companies do not compete head-to-head on
the same street or in the same neighborhood, since overbuild situations are not
economically viable. But the current expansionist trend could change all of that.
Intercable, for example, foresees breaking out of the
central and western region soon and going national. The deregulation of Venezuela's
telecommunications industry in the year 2000 -- allowing the transmission of services such
as voice, data and video over one broadband pipe -- could also radically change the
economics of overbuilding, Scharffenorth said.
