Telefónica heads list of bidders for BellSouth’s LatAm operations

5 Mar 2004

Spanish PTO Telefónica is in negotiations to acquire BellSouth Corporation’s Latin American wireless portfolio for up to USD6 billion, although it may yet face competition for the assets from rival bidders America Movil and Telecom Italia. Telefónica, which already has substantial mobile operations in eight countries across the region, confirmed yesterday that it was undertaking due diligence studies on the assets, as well as exploring the regulatory and accounting impact of any deal. If Telefónica decides to push ahead with the acquisition it would gain access to six new markets – Colombia, Ecuador, Nicaragua, Panama, Uruguay and Venezuela – creating the largest mobile company in the Latin American region. Atlanta-based BellSouth is thought to be keen to sell the shareholdings to help pay its 40% share of the USD41 billion needed by its US subsidiary Cingular Wireless to pay for AT&T Wireless.

At the end of 2003 Telefónica Moviles claimed 27.5 million customers across the seven LatinAmerican countries in which it was operational, up from 19.35 million twelve months previously; pre-paid customers accounted for 78% of the total. By far its biggest subsidiary is its Brazilian joint venture with Portugal Telecom, Vivo (formerly branded Brasilcel), which amalgamates both parents’ mobile subsidiaries and includes Telesp Celular, Global Telecom, Tele Sudeste Celular, Celular CRT and Tele Leste Celular. At the end of 2003 Vivo had a customer base of 20.7 million, up from 13.7 million. Should Telefónica acquire BellSouth it will be able to add rival B-band concessionary BCP to its portfolio of shareholdings. BellSouth has a 44.5% stake in BCP, which competes with Vivo subsidiary Telesp Celular in the Sao Paulo Metropolitan area.

Argentina, Guatemala and Peru are the other Latin American markets where Telefónica would increase its customer base and knock out part of the competition in one fell swoop. However, these three markets accounted for just 2.38 million of the 12.26 million subscribers connected to BellSouth’s Latin American subsidiaries at the end of 2003, and perhaps of greater interest to Telefónica Moviles is Colombia and Venezuela – two markets it has yet to gain a foothold in. BellSouth had 5.22 million customers in these two countries at the end of 2003, equal to 42.5% of its total base.

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