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Bell Canada International Consortium Wins Sao Paulo
State Telecom License; Creates Brazil's Largest Fixed Telephony Footprint
Business Wire - April 23, 1999 12:22
MONTREAL--(BUSINESS WIRE)--April 23, 1999--Bell Canada International Inc.
("BCI")(NASDAQ:BCICF)(ME:BI)(TSE:BI) announced today that a BCI-led consortium bidding under the name Megatel do Brasil ("Megatel") has submitted the winning bid for the operating license to provide competitive local exchange services in the key Brazilian State of Sao Paulo. The winning bid contained a license fee of R$70 million (US$41 million) - the minimum price set by the Brazilian government - and a network plan to cover the major cities of the Sao Paulo State.
Sao Paulo State is the most populous and economically advanced of the 27 Brazilian states, with a
population of 35 million and a 1997 GDP per capita in excess of US$8,000. The State economy and
population constitute the single largest market in South America, similar to that of Argentina.
The winning consortium brings to the Sao Paulo CLEC a unique combination of expertise in the areas
of building and successfully managing telecommunications operations, advanced technology and
international finance, as well as experience in the Sao Paulo market. BCI owns a 35.3 percent interest
in the consortium and is joined by WLL International Inc. (35.3 percent), Qualcomm Incorporated
(16.6 percent) and the Liberman Group of Argentina (12.8 percent).
In January of 1999, the same consortium, acting under the name "Canbra Telefonica", won the license
to provide service in the Northeast region of Brazil, which is contiguous to Sao Paulo State, and is
home to almost 90 million people. The addition of Sao Paulo gives the consortium a combined licensed
territory with approximately 125 million residents, including the cities of Greater Sao Paulo, Greater
Rio de Janeiro, Belo Horizonte and Salvador. These two territories form the equivalent of the world's
ninth most populous country and ninth largest economy. The consortium plans to service the area
primarily via state-of-the-art fixed wireless access technologies capable of providing a range of
switched or internet-based services.
Derek Burney, Chairman and CEO of BCI, welcomed the news, stating "The combination of Sao
Paulo and the Northeast region of Brazil creates the largest fixed telephony service footprint in Brazil
today, and will make BCI the world's largest operator of fixed wireless access networks. With BCI
taking on the lead operating role in these ventures, the consortium will benefit from our experience at
Axtel S.A., which is deploying a similar network in Mexico to provide competitive exchange services
on a nation-wide basis."
BCI is in the business of building and developing world-class communications companies in markets
outside of Canada, with a focus on Latin America and the Asia-Pacific region. The company's affiliated
operations provide a range of high quality and innovative services to more than 3.6 million subscribers
in eight countries, primarily via digital, wireless networks. A subsidiary of BCE Inc., Canada's largest
communications company, BCI is listed on the Montreal and Toronto stock exchanges under the
symbol BI, and on the Nasdaq National Market under the symbol BCICF.
FACT SHEET
BCI CONSORTIUM: PARTICIPATION IN BRAZIL'S MIRROR AUCTIONS
WHO? The BCI Consortium
The BCI Consortium brings together a unique combination of expertise in the areas of building and
managing telecommunications operations, advanced technology and products, international finance and
local Brazilian experience.
Consortium Members Percentage Stock Symbol For More Info:
Ownership
---------------------------------------------------------------
Bell Canada
International Inc. 35.3 percent NASDAQ: BCICF www.bci.ca
TSE/ME: BI
---------------------------------------------------------------
WLL
International Inc. 35.3 percent privately held 1-303-874-1120
---------------------------------------------------------------
QUALCOMM
Incorporated 16.6 percent NASDAQ: QCOM www.qualcomm.com
---------------------------------------------------------------
SLI Wireless, S.A. 12.8 percent privately held 54-1-316-9952
---------------------------------------------------------------
- Bell Canada International (BCI) is a subsidiary of BCE Inc., Canada's largest communications
company, and is a leading provider of telecommunications services in markets outside of Canada.
BCI's footprint in Latin America covers 153 million potential customers (POPs) and includes just
under one million subscribers.
- WLL International was formed in June, 1998 with the intent to become a leading provider of
fixservices in Latin America. The company is currently privately held by Telecom Partners, Centennial
Funds, Crescendo Ventures and management.
- QUALCOMM is the leading supplier of CDMA wireless local loop networks worldwide, and is a
leader in developing and delivering innovative digital wireless communications products and services
based on the company's CDMA digital technology.
- SLI Wireless is part of the Liberman Group which was created to invest in fixed wireless
opportunities in Latin America.
WHAT? Mirror Auction Results
The Winning Bid
The consortium won the bid for the operating license for fixed telephone services in the Brazilian State
of Sao Paulo.
The bid was submitted to ANATEL on March 19, 1999. The consortium submitted one of three bids,
with the early disqualification of one of the three bidders. The two qualified bids were opened on April
23, 1999.
The winning bid constituted a network plan to cover the major cities in the Sao Paulo State and a
license fee of R$70 million (US$41 million). ANATEL's decision was based on a weighted average
calculation, with a factor of 70 percent for the network deployment and a factor of 30 percent for the
amount of license fee.
In January, a similar consortium won the license for fixed telephone service in Brazil's Norte Leste
region.
Operating License Terms
- The operating license is expected to be issued to the consortium in May , 1999.
- The license fee is payable over 2 years, with the initial 40 percent payable upon license issuance.
- The license authorizes operation of telecommunications systems in the following frequencies: 450
MHz, 1.9 GHz and 3.5 GHz.
- The license provides for the right to use the associated radio frequencies for a twenty year term,
renewable once for an equal period.
- The license stipulates an exclusive duopoly in fixed telephony services in Sao Paulo State until
December 31, 2001, after which additional competition may be introduced.
HOW MUCH? A Comparison
The winning consortium bid R$70 million (US$41 million), which was the minimum price set by the
Brazilian government.
Sao Paulo Region
BCI Consortium Telesp
Purchase Privatization
------------------------------------------------------------
Total Price US$41 million US$37 billion
Price Per POP US$1.2 US$1,100
Price Per Line n/a US$7,200
Net PP&E (1997) n/a US$11 billion
Northeast Region
BCI Consortium Tele Norte Leste
Purchase Privatization
------------------------------------------------------------
Total Price US$38 million US$20 billion
Price Per POP US$0.4 US$240
Price Per Line n/a US$3,000
Net PP&E (1997) n/a US$12 billion
HOW? The BCI Consortium Deployment Plans
- The BCI consortium expects to invest approximately US$ 1 billion in deploying state-of-the-art fixed
telecommunications networks
- The consortium will offer high quality, reliable and cost- effective telephone services to Brazilian
consumers throughout the State of Sao Paulo
- The consortium will employ a combination of the most advanced wireless and wireline
telecommunications technologies, including cdmaOne(TM).
CONTACT: Bell Canada International Inc.
Peter Burn (Media Enquiries), 514/ 878-1223
peter.burn@bci.ca
or
Bell Canada International Inc.
Anne Duprat (Investor Enquiries), 514/ 392-2273
anne.duprat@bci.ca
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