América Móvil to revamp Brazilian networks

3 Jun 2003

América Móvil [NYSE: AMX], the Latin American cellular holding company created by Telmex in September 2000, has announced plans to invest over USD600 million in its Brazilian networks over the next three years. The company, which is controlled by Mexican entrepreneur Carlos Slim Helu, plans to upgrade its four existing Brazilian networks from TDMA to GSM technology; the contracts will also expand network coverage to the additional five states for which it won licences last year. According to reports on Bloomberg, the principal contractors will be Ericsson, Siemens and Alcatel.

América Móvil operates in Brazil under the banner Telecom Americas via four operating companies: ATL, Tess, Telet and Americel. The company was initially formed in November 2000 as a joint venture with Bell Canada International (BCI) and SBC Communications, and included a number of operations outside of Brazil. At the start of February 2002, however, the company was radically restructured and those assets outside of Brazil were sold. The following June América Móvil announced it had reached agreement with BCI to purchase its 39.1% interest in the venture for USD366 million. On the close of the deal, America Movil then exercised a call option on SBC’s 11.5% interest in Telecom Americas, a move which increased its stake to 96.6%.

In November 2002 Telecom Americas participated in the auction of 1900MHz licences, winning concessions to operate in the city of Sao Paulo and the states of Santa Caterina, Parana, Bahia and Sergipe at a cost of BRL429.3 million. At the end of 2002 Telecom Americas had 5.2 million subscribers, a 15% share of Brazil’s 33 million mobile phone owners.

CIT's Datafile of Latin American Telecommunications