Tuesday April 20, 6:25 pm Eastern Time
Leap Wireless seeks partner for Chile PCS network
SANTIAGO, April 20 (Reuters) - U.S.-based wireless communications carrier Leap Wireless International, Inc. (LWIN - news) on Tuesday said it is looking for a partner to help develop its Chilesat PCS Chilean wireless carrier.
''We are looking for a Chilean partner or investor who knows the market,'' Daniel Pegg, senior vice president of public affairs at Leap, told reporters.
On Tuesday, Leap, of San Diego, Calif., closed a deal in which it increased its ownership of Chilesat Telefonia Personal SA (Chilesat PCS) to 100 percent from 50 percent for $50 million.
It purchased the stake from Chilean telecommunications concern Telex-Chile (TL - news) and its affiliate Chilesat SA.
Leap paid about $42 million for the original 50 percent, which it purchased in the mid-1990s, Pegg said.
By no means is Leap desperate for a partner, he said.
''We bought the other half of the company knowing we may have to carry it for some time,'' he said. ''If we don't find someone, our resources will be able to sustain the operation.''
Initially, the partner would have ''a small percentage,'' and Leap would retain control, Pegg said.
''We would want to reserve the rest to sell at a future date,'' he said, explaining that later Leap might add even more investors to Chilesat PCS and hand them more than 50 percent.
The initial partner would not need to be a telecom operator, but it would need to possess the ''financial capacity to carry (its) percentage of the project,'' he said.
Leap has not spoken with any possible candidates yet, not even Chilean holding company Quinenco (LQ - news) , Pegg said.
Market watchers speculate that Quinenco, which is run by Chile's Luksic family, could turn to the telecom sector as a destination for the large wad of cash that it soon will have in its hands.
Quinenco plans to sell its 50 percent in financial holding O'Higgins Central Hispano (OHCH) for $600 million, which would generate a $300 million net profit.
Quinenco used to have interests in Chilean telecom firm VTR, and it currently owns a small stake in Entel , the country's leading long-distance carrier.
With Leap's acquisition of Chilesat PCS, a new era has begun for the latter, Pegg said.
Chilesat PCS launched commercial services in September 1998, and although demand for the service was strong, it experienced short-term funding problems because of Telex-Chile's debt burden, Pegg said.
On Friday, however, Telex said it reached an agreement with lender banks to put an end to its long-standing financial problems.
Leap plans to recapitalize Chilesat PCS, which would allow it to go ahead with an expansion of the network and services.
Chilesat PCS' nationwide wireless network covers 85 percent of the country's population and has 28,000 subscribers, Pegg said.
Chilesat PCS is revising its investment plan, said its general manager, Richard Sutherland, who accompanied Pegg. Sutherland and Pegg, however, would not disclose a figure for expected investment.
In September, Chilesat PCS said it planned to invest $300 million in the next five years.
Chilesat PCS is considering changing its name, and it plans to launch a new advertising campaign, Sutherland said, adding that it will not start a price war.
Leap, which also has all-digital wireless services in the United States, Mexico and Russia, hopes to launch a service in Australia this year, Pegg said. |
