Brasil Telecom to cut spending

2 Oct 2003

Brasil Telecom Participaçoes is to slash its capital expenditure for the full year by BRL440 million to BRL1.4 billion (USD478 million). The company, which runs Brasil Telecom SA in the central, midwest and southern areas of the country, said the decision was prompted by the country’s economic slowdown and that it expected to reduce its net debt as a result. However, analysts have expressed concern that the decision was really prompted by the ongoing battle between the company’s major shareholder CVC/Opportunity Fund and minority investor Telecom Italia, which is fighting to regain its voting stake in the company. CVC/Opportunity is vehemently opposed to the move because Brazilian law prohibits Brasil Telecom from launching its planned wireless services in regions where its shareholders already operate; Telecom Italia Mobile already provides services in many of the areas in which Brasil Telecom is planning to launch.