Bloomberg News

America Movil, DirecTV Brazilian Taxes Set to More Than Double

September 19, 2012

Brazil’s state governments will decide next week whether to more than double a sales tax on pay- TV services from companies such as America Movil SAB (AMXL) and DirecTV (DTV:US) as officials seek revenues from a growing market.

The so-called ICMS tax for cable and satellite TV may be increased to 25 percent from 10 percent in a meeting scheduled for Sept. 28, said Claudio Trinchao Santos, the coordinator of Confaz, the board that brings together state finance secretaries. The rate increase, which has already been recommended by Confaz’s technical board, would bring it to the same level charged for telephone services, he said.

Brazilian pay-TV subscriptions will jump to 17 million by the end of the year from 12.7 million in 2011, according to estimates by the country’s telecommunications regulator. By 2018, Anatel, as the regulator is known, expects 35 million subscribers.

America Movil, based in Mexico City, held about 55 percent of Brazil’s pay-TV market at the end of last year through its Net Servicos and Embratel units, according to Anatel. El Segundo, California-based DirecTV’s Sky service had about 30 percent of the market.

States are considering the increase in part to prevent telephone companies such as Oi SA (OIBR4) and Telefonica Brasil SA (VIVT4) from arguing that they should pay only a 10 percent tax when they sell a combination of services that includes voice, Internet and pay-TV, said Trinchao, who is the finance secretary for the state of Maranhao.

To contact the reporter on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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