According to Moody's, the review process was triggered by a new law in Brazil that allows fixed-line telcos to offer TV services over their networks and also the elimination of a 49% cap on foreign ownership of cable operators.
The review is also related to the announcement of negotiations for Embratel to exercise an option to purchase some 2% in voting shares held by media group Globo Comunicacão e Participacões. The transaction would allow Embratel to become a controlling shareholder of cable operator Net Serviços (NYSE: NETC).
Also prompting the review was an announcement that Embratel, Net Serviços and mobile operator Claro - América Móvil's (NYSE: AMX) three Brazilian subsidiaries - would offer bundled services, which would benefit AMX's expansion plan in the country.
According to Moody's, the review process will focus on the timing of the approval and conclusion of the acquisition of Net's controlling shares by Embratel, the level of América Móvil support, the strategy to integrate the various entities in Brazil, and the financial strategies of these entities.