March 12, 1999
Tech Center
British Telecom to Buy 20% of ImpSat
In Its First Foray Into Latin America
By GAUTAM NAIK
Staff Reporter of THE WALL STREET JOURNAL
LONDON -- British Telecommunications PLC made its first foray into Latin America by agreeing to acquire 20% of ImpSat, a regional telecom carrier, for 90 million pounds ($146.4 million).
ImpSat, a closely held company controlled by an Argentinian family, operates networks in key cities of Argentina, Brazil, Colombia, Ecuador, Mexico and Venezuela. It has some $200 million in annual revenue, employs 1,000 people and provides service to 1,500 corporate customers via satellite and fiber-optic links.
The investment in ImpSat is small for a giant like BT, which has extensive international operations and a large cash balance to finance acquisitions. But after staying out of Latin America for so long, the U.K. company is now eager to boost its presence in the region.
"There's no doubt we see this as a springboard for other activities in the region," said Andy Green, BT's group director of strategy and development. "We're not in a rush, but we're active."
While major European and U.S. telecom companies have jumped into Latin America in a big way, BT has been cautious. One reason is that BT prefers to invest in new competitors rather than former phone monopolies. Risks in local economies also have caused concern. The recent downturn in Brazil, for instance, has hurt investments made by carriers like Telefonica SA and Portugal Telecom SA.
"We spent some time examining the South American region and concluded we weren't going to make shareholders money" with more sizable investments, Mr. Green said. "We wanted to attack the incumbents and take advantage" of the huge growth in data services in the region, he added.
BT said ImpSat will become a distributor of its Concert services, which are offered to large corporate customers around the world. While BT will own 20% of ImpSat, the majority interest will remain in the hands of Nevasa Holdings, which is based in Buenos Aires. Private equity funds affiliated with Morgan Stanley Dean Witter will continue to hold a minority interest.
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