WSJ -- Telefonica Moviles to Acquire Stake In Mexican Wireless Firm Pegaso
April 29, 2002
Telefonica Moviles to Acquire Stake In Mexican Wireless Firm Pegaso
By ROBERT FRANK
Staff Reporter of THE WALL STREET JOURNAL
Spanish mobile-phone giant Telefonica Moviles SA has agreed to
purchase a 65% stake in Mexican wireless operator Pegaso for between
$80 million to $90 million, plus the assumption of about $1.27 billion in
debt and other considerations.
The deal, which was expected, could be announced as early as Monday
morning and gives Telefonica control of Mexico's second-largest
wireless operator. Telefonica is buying the stakes from Sprint PCS, Leap
Wireless, Citicorp Equity Capital, AIG-GE Capital Latin America
Infrastructure Fund and the Nissho Iwai Corporation. Most of the debt
is being acquired from Qualcomm Inc., which is Pegaso's largest
creditor.
Under terms, Telefonica will acquire a 65% in Pegaso for a total of
$1.36 billion, including between $80 million to $90 million in equity, and
the assumption of about $1.27 in debts and other considerations
including equity. The remaining 35% of the company will continue to be
held by the Grupo Burillo.
With the acquisition, Telefonica aims to strengthen its presence in
Mexico and challenge the country's dominant operator, American Movil.
When Pegaso is with Telefonica Moviles Mexico, the combined
company will have about 2.1 million subscribers, compared to America
Movil's more than 17 million subscribers.
The deal caps Telefonica's aggressive acquisitions in the late 1990s,
which included wireless companies throughout Europe and Latin
America. Telefonica has acquired stakes in operators in Chile, Brazil,
Argentina, Peru, Central America and Venezuela, investing nearly $25
billion to become the largest telecom operator in the region.
Greenhill & Co. acted as financial adviser to Pegaso, while Lazard LLC
advised Telefonica and Morgan Stanley advised Qualcomm.
Write to Robert Frank at robert.frank@wsj.com
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