Carrier’s carrier Electronet files for bankruptcy

1 Apr 2003

Brazil’s Electronet, which offers transmission capacities to other local carriers in its domestic market, has filed for bankruptcy, leading to rising speculation that it may be a plum target for acquisition by one of the country’s three fixed line telcos, Telsp, Telemar or Brasil Telecom. In its most recent financial report for the three months ended 30 September 2002 Electronet reported losses of BRL56 million (USD16.7 million) on turnover of BRL8.7 million and posted financial expenses of BRL37.7 million. The company, which was founded in 1999 by LightPar, a division of Brazil’s power utility Electrobras, owns and operates a 16,000km national broadband network over the national electricity grid. Its larger clients include Telefónica of Spain, Portugal Telecom unit Primesys, long-distance carrier Intelig, competitive local exchange carrier (CLEC) Vésper and local data transmission company Pegasus. However, its recent poor performances have prompted local analysts to predict that it could now be bought by one of the three incumbents, although Brazilian long-distance operator Embratel has been ruled out of the running due to a shortage of cash. Electronet’s network is estimated to be worth USD500 million, although some local industry watchers claim the figure to be ‘absurdly high’ given the current trading climate, adding that this could deter any interested buyers. Electronet is 51% owned by US-based energy company AES.