Brasilcel deal expands Brazil mobile coverage
Financial Times (London)
January 17, 2003
By RAYMOND COLITT
SAO PAULO; Portugal Telecom and Spain's Telefonica Moviles have gone on the offensive to dominate Brazil's cellular phone market with the RDollars 1.4bn (Dollars 423m) acquisition of a local service provider.
Brasilcel, their joint venture, yesterday announced an agreement to take control of 61.1 per cent of voting shares in TCO, which operates in the country's Centre-west and North.
The deal will give the two Iberian companies, which merged their cellular phone assets in Brazil, more than half of the country's 33m mobile phone users. "It is a big step in consolidating their leadership in the market," said Rodrigo Pereira, a telecommunications analyst with Banco Pactual, an investment bank in Rio de Janeiro. He considered the purchase price to be "reasonable".
The move will allow Brasilcel to expand its footprint and offer its CDMA digital technology in a vast area that includes the country's capital, Brasilia.
Amidst tightening profit margins throughout the industry, TCO has managed to maintain a healthy bottom line.
For the first three quarters of last year it had a net profit of RDollars 230m.
Brasilcel's other three main competitors are Telecom Italia Mobile (TIM), Mexico's America Movil, and Brazil's Telemar.
While TIM is the first and only company to offer its own nationwide coverage, it has less than a third of Brasilcel's customer base. It has launched a massive advertising campaign featuring Brazil's football star Ronaldo.
Telemar, a fixed-line operator, only began offering cellular phone service a few months ago but has already won 1.4m customers.
The acquisition of TCO will be paid in cash and stocks from Telesp Celular (TCP), Portugal Telecom's local unit.
The purchase and share offer will increase TCP's debt by approximately RDollars 2bn. The final price could be adjusted during the due diligence process, the companies said.
Credit Suisse First Boston and Banco Espirito Santo, a local bank, advised on the transaction.
TCP will subsequently make an offer to buy the remaining stake in TCO from minority shareholders.
Telefonica Moviles shares were up marginally at Euros 6.81, while PT shares also rose slightly at Euros 7.25 on the Euronext Lisbon Bourse. |
