Control of Two Brazilian Wireless Concerns Apparently Shifts Again
Dow Jones Online News, 06/08/2001 22:48
By Terry Wade Dow Jones Newswires
SAO PAULO, Brazil -- Control of Brazilian wireless companies Telemig Celular Participacoes SA and Tele Norte Celular Participacoes SA appears to have changed hands again Friday.
This time, Brazilian private equity fund Opportunity came out on top, just a month after Canada's Telesystem International Wireless Inc. (TIWI) and a group of local pension funds wrestled control of Telpart -- the holding company of the two wireless operators -- away from Opportunity.
At an extraordinary general shareholders meeting, Opportunity said Antonio Britto -- the ex-governor of Rio Grande do Sul state and an Opportunity representative -- was elected Telpart's chairman. He replaces Gunnar Vikberg, a member of Telesystem's advisory board in Brazil.
Lawyers for Opportunity disclosed the vote. On the other side of the battle, sources with the pension funds confirmed the change, while Telesystem wasn't able to comment. Legal challenges are expected to follow.
At a May board meeting, Telesystem and the pension funds elected Mr. Vikberg as chairman after a judge in a Rio de Janeiro state court ruled that the pension funds had to have represention on Telpart's board. Prior to the ruling, stakes of the pension funds had been contractually bound with Opportunity in Newtel, a company where Opportunity had a majority stake. Before the May vote, Newtel had 51% majority control of Telpart.
But it remains unclear if the Rio de Janeiro court ruling applied to extraordinary general meetings, because Friday only Newtel and Telesystem voted and no votes were cast by the pension funds themselves.
Control of Telemig (TMG) and Tele Norte (TCN), which combined have about 1.8 million users, is extremely important because they are considered prime candidates to be snapped up by larger companies. Under Brazilian corporate law, having control guarantees you the right to receive almost all of the upside from premiums offered in acquisition deals, while minority shareholders have few protections.
Thursday, lawyers representing Opportunity submitted a letter to Telesystem to express interest in buying the Canadian firm's stakes in Telemig and Tele Norte. Telesystem had no comment on the proposal. It has said in the past it isn't interested in selling its Telemig and Tele Norte stakes, but has talked about restructuring pieces of its operations in Europe.
Analysts say trends indicate there will be just three nationwide operators in Brazil's wireless sector, which has about 22 million wireless users.
Active acquirers are seen as the Brazilian joint venture of Spain's Telefonica Moviles SA (TEM) and Portugal Telecom SA (PT), Telecom Americas Ltd. -- the joint venture of Bell Canada International Inc. (BCICF), America Movil SA (MX) and SBC Communications Inc. (SBC) -- and Telecom Italia Mobile SpA (TI). Telecom Italia has already filled out a nationwide footprint in South America's biggest economy by combining its existing units there with new wireless licenses.
Write to Terry Wade at terry.wade@dowjones.com
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