U.S. telecoms to pursue Brazil's "mirror" licenses
Reuters, Friday, July 31, 1998 at 19:05
By Jessica Hall
NEW YORK, July 31 (Reuters) - U.S. telecommunications
companies are expected to aggressively pursue licenses for
companies that will compete against the recently-auctioned
units of Telebras (SAO:TELB4) (NYSE:TBR), Brazil's huge telephone
system, analysts said.
"There will be a lot of interest. The competition will be
fierce, even more fierce than in the auction, since some people
will see this as their last chance to get into the market
before it becomes too entrenched," said Jamila Xible, an
international telecommunications analyst with the Yankee Group,
a consulting firm.
The Brazilian government on Wednesday raised $19 billion --
$5 billion more than expected -- during the privatization
auction of the 12 Telebras units.
Companies that failed to win a piece of Telebras during the
auction can now apply for concessions to set up "mirror"
companies to compete against the former Telebras operations.
The Brazilian government plans later this year to sell
licenses for a long-distance concession and three wired
telephone concessions providing local service.
MCI Communications Corp. (NASDAQ:MCIC), which bought Telebras'
long distance and international unit Embratel, was the only
U.S. telecommunications company to win a major stake in the
auction.
Some analysts said they had expected the U.S. telecoms to
be more aggressive during the auction, but instead Spain's
Telefonica de Espana SA (MADRID:TEF) was seen among the biggest
victors.
Analysts now expect U.S. companies BellSouth Corp. (NYSE:BLS)
and Sprint Corp. (NYSE:FON), which lost out to higher bidders in
the auction, to battle aggressively for the mirror licenses.
"The companies that didn't win are kicking themselves,
worried that they may have just missed the greatest growth
opportunity that they've seen in a long time," said one analyst
who declined to be named.
Sprint may also try to join the consortium that won
Telenorte, a fixed line company serving the north and
northeastern areas of Brazil, Xible said.
SBC Communications Inc. (NYSE:SBC), the Texas-based Baby Bell
set to merge with Ameritech Corp. (NYSE:AIT), may also seek a
mirror license, but its interest in Brazil is seen as more
tepid than that of BellSouth or Sprint, analysts said.
Sprint declined to comment specifically on Brazil but the
company said it was always looking for growth opportunities.
Sprint has a presence in Brazil through its international
joint venture with Deutsche Telecom (FSE:DTEG) and France Telecom
(SBF:FTE), called GlobalOne. The venture provides data services
in 11 major cities.
SBC also said it was always on the lookout for new
opportunities. BellSouth spokesman John Price said the
Atlanta-based Baby Bell will study the possibility of seeking a
mirror license but declined further comment.
"We will study it. We'll be looking at what the
opportunities are," Price said.
BellSouth also has an existing presence in Brazil. Last
year, BellSouth and its partners won a license to provide
cellular telephone service in Sao Paulo.
BellSouth launched its wireless service in May and has
quickly gained about 300,000 customers. It expects that number
to grow to about 500,000 by the end of the summer.
For the mirror licenses, the Brazilian government is going
to consider many more factors than just price, analysts said.
The govenment will look closely at the companies' commitment to
the local community and ability to invest in infrastructure to
ensure communications services are not limited to just the most
wealthy and densely-populated areas, analysts said.
"Commitment of the operator will be more of a factor than
price," Xible said.
Companies interested in a "mirror" concession must submit
bids by November 3 and the board of ANATEL, Brazil's
telecommunications watchdog, will ratify bidders in December.
Copyright 1998, Reuters News Service |
