Spain's Telefonica Reportedly To Form Joint Venture With IDT Corp.
Dow Jones Online News, Thursday, August 12, 1999 at 02:16
(Published on Wednesday, August 11, 1999 at 23:13)
NEW YORK -(Dow Jones)- Spanish telecom giant Telefonica SA has agreed
to form a wide-ranging joint venture with IDT Corp., a
telecommunications company that offers Internet-based telephone
services, to market telephone and Internet service to Spanish speakers
in the U.S. and Latin America, the New York Times reported Thursday.
The companies plan to announce the venture Thursday, executives said.
Madrid-based Telefonica will own a bare majority of the joint
venture, according to people close to the deal. It will try to use IDT's
billing and customer relationship systems to provide stronger prepaid
calling card offerings in Latin America and perhaps prepaid cellular
service.
In the U.S., the venture may try to link IDT's (IDTC) Nuestra Voz
Internet service with Telefonica's Ole! Web portal service.
Hackensack, N.J.-based IDT intends to invest about $10 million in the
venture initially, executives close to the deal said, though that figure
could increase sharply if the venture's first initiatives succeed.
In addition to the joint venture, IDT has also agreed to acquire 10%
of a project begun by Telefonica to lay an underwater fiber optic
communications cable around Latin America, executives close to the
agreement said. The cable, which will include connections from Chile to
the United States, is meant to be completed in a few years at a cost of
about $1.5 billion.
IDT's investment will be somewhat less than $150 million, however,
because some of the $1.5 billion will be raised through debt financing,
the executives said.
IDT has also agreed to buy at least $100 million worth of
communications services from the overall undersea cable venture over
five years, the executives said.
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