MCI Wins Bid for Brazil Long Distance Operator Embratel In World's Largest Privatization
PR Newswire - July 29, 1998 11:37
RIO DE JANEIRO, Brazil, July 29 /PRNewswire/ -- MCI, through its
wholly owned Brazilian subsidiary Startel, today won the tender for
51.79 percent of the voting shares of Embratel, the long distance
company of Brazil. Of the Telebras companies privatized by the Brazilian
government today at the Rio de Janeiro Stock Exchange, Embratel has
the only nationwide and international network and is directly connected
to tens of thousands of business customers.
Embratel provides interstate long distance and international
telecommunications services, as well as over 40 other communications
services, including leased high-speed data, satellite, Internet, frame and
packet- switched services. Embratel is an ideal fit for MCI's and
WorldCom's international growth strategy and extends the companies'
local-to-global approach. Embratel's wholly-owned nationwide and
international network meshes well with MCI's and WorldCom's global
initiatives and complements the companies' plans with Telefonica.
The offer of US$2.3 billion (R$2.65 billion) was within MCI's valuation
of the company. Forty percent of the bid price is payable within the next
five days, with the balance due in two annual installments.
"The combination of MCI and Embratel will offer unmatched services,
state- of-the-art technology and superior operational expertise that will
help drive Brazil's telecommunications revolution. Embratel is the leader
in data and Internet services in Brazil and has, by all measures, the largest
broadband fiber network covering more than 9,000 kilometers. Based
on this growth and aggressive local company build-out requirements
aimed at doubling teledensity from 10 to 20 in the next four years,
Brazil's LD market is expected to grow 20 percent per year over the
next 5 years," said Michael J. Rowny, executive vice president and acting
CFO, MCI.
"MCI, Embratel and WorldCom are entering a new world of competition
and opportunity. As a result of the privatization process, Embratel which
until today was limited to the US$5 billion interstate long distance and
international market will now also be allowed to compete in an additional
US$5 billion intrastate long distance market which previously was
reserved exclusively to the local companies. With full deregulation
occurring in 2002, Embratel's addressable market will grow to more than
US$30 billion, making it one of the most attractive opportunities in the
world," said Rowny.
Brazil is the world's fifth largest country, the ninth largest economy, nearly
twice the size of Mexico and almost five times the size of Argentina.
Brazil is Latin America's largest communications market representing
almost half of the entire communications market in Latin America. In
1997, Brazil's communications market was valued at US$15 billion and
had 16 million fixed telephone lines growing at an annual rate of 17
percent.
MCI has over 50 years of presence in Brazil with offices in Rio de
Janeiro and Sao Paulo. In December 1996, MCI Systemhouse
purchased a one-third interest in Proceda, one of Brazil's leading
international systems integration and outsourcing companies. Today,
MCI has offices in 21 countries in the region and direct company
investments in Mexico, Belize and Venezuela, in addition to Brazil. MCI
is the second largest carrier of international telephone traffic from the
U.S. to Latin America. The company's global network includes
ownership in the major cable routes from the U.S. to Latin America and
16 satellite earth stations in the region. MCI is also the largest owner of
the Pan American Cable System now under construction-the largest ever
fiber optic cable linking the U.S. with Central and South America.
MCI, headquartered in Washington, D.C., is a leading provider of
local-to- global communication services to business, government and
residential users. The company's fast-growing portfolio of advanced data
and IT services accounts for a quarter of MCI's approximately $20
billion in annual revenue. MCI operates one of the world's largest and
most advanced digital networks, connecting local markets in the U.S. to
hundreds of locations worldwide. MCI has agreed to merge with
WorldCom, one of the world's fastest growing communications
companies. The merger will create MCI WorldCom, a company
uniquely positioned in the U.S. local and long distance markets as well as
the global data and Internet markets.
SOURCE MCI Communications Corporation
/CONTACT: Investor Calls: Mike Kraft, 202-887-2028 or Media
Calls: Manuel
Wernicky or Jane Levene, 202-887-3000 or 800-644-NEWS, all of
MCI/ |
