Unefon and Nortel Networks Sign US$600 Million
Vendor Procurement and Finance Agreements
- Final Step Before Building Network and Launching Service
- Mexico's Most Innovative and Affordable Wireless Telephone Service
- Major Commitment by Unefon to increase Mexico's Teledensity
MEXICO CITY, Oct. 8 /PRNewswire/ -- Unefon, S.A. de C.V., Mexico's largest
radio spectrum holder, and Nortel Networks, (NYSE: NT; TSE), one of the world's
leading providers of network solutions, today announced the signing of Vendor and
Procurement Financing Agreements that will allow Unefon to begin offering home
and business telephone service in Mexico.
More than US$600 Million for Unefon Equipment and Working Capital
Unefon will rapidly deploy a scalable network, based on CDMA technology
operating at the 1.9 GHz frequency. The Procurement Agreement includes up to
US$480 million of equipment purchases over five years. The Finance Agreement
provides financing to purchase the equipment and additional amounts for Unefon's
working capital needs, totaling more than US$600 million. Under the Unefon/Nortel
Agreements, Nortel Networks will also provide the necessary software and
hardware for the operation of the Unefon network, as well as engineering services.
"With today's announcement, Unefon begins to build its nationwide network in
Mexico," commented Moises Saba, Chairman and Executive President of Unefon.
"Nortel Networks is a global leader in wireless and CDMA technologies. They have
extensive experience in deploying rapid build-out, scalable and integrated networks,
with proven cutting-edge technology. In addition, they share our strong commitment
to the Mexican market."
Mr. Saba explained that Unefon is now only a few months away from launching its
commercial service, offering affordable, easy-to-use, home and business telephone
service throughout Mexico.
Unefon is Biggest Radio Spectrum Holder in Mexico
Throughout 1998 and 1999, Unefon was awarded a wide range of radio spectrum,
composed of 30 MHz of bandwidth at the 1.9 GHz frequency, 50 MHz at the 3.4
GHz frequency, and 112 MHz at each of the 7 GHz and 38 GHz frequencies. These
licenses cover the entire country, a total of 98 million people. The first stage of
Unefon's operations -- basic telephone service -- will only use a small fraction of the
Company's broad-band spectrum.
The Company is a 50-50 joint venture between the Saba family and TV Azteca.
Moises Saba is a successful entrepreneur in the textile, real estate and
entertainment industries in Mexico. TV Azteca is one of two broadcast television
companies in Mexico, with two national networks comprised of more than 250
owned-and-operated stations located throughout Mexico.
Unefon Goal: Two million Customers by 2004
The Unefon/Nortel Agreements contemplate a nationwide network with a capacity
of more than 1.5 million subscribers, representing a total investment of more than
US$1 billion, including the Company's radio spectrum.
The Company plans to reach over 2 million customers by 2004, requiring some
additional investment in the future to expand Unefon's network. To date, Unefon's
shareholders have invested more than US$370 million in equity contributions and
have committed to contributing an additional US$50 million in the future.
"Unefon has developed a creative and ambitious business plan to bring affordable
wireless services to millions of people in Mexico," said Gary Donahee, Executive
Vice President and President, Service Provider Solutions -- Americas, Nortel
Networks. "We look forward to working with Unefon to develop the voice, data and
Internet infrastructure for the new millennium."
Unefon to Begin Commercial Operations in December 1999
Unefon plans to initiate commercial operations in December 1999. By mid-year
2000 the Company expects to be operating in 16 cities and in 22 cities by the end
of 2000, an area with a population of over 35 million people, representing 53% of
Mexico's urban population.
The Company has developed a unique business plan that will enable it to reach its
target market in a cost-effective manner. This includes strategic alliances with TV
Azteca and Elektra.
TV Azteca will provide intensive nationwide advertising to develop Unefon brand
recognition and publicize its services. TV Azteca currently wins an average daily
audience of over one-third of all Mexican television viewers.
Under its agreement with Elektra, Unefon services will be sold in Elektra's 850
stores located throughout Mexico, thereby giving Unefon immediate access to its
target consumers. Elektra is Mexico's largest specialty retailer, with a database of
more than 3 million clients and 1.5 million active credit customers. In addition to
marketing the Unefon's services, Elektra will administer payment and collections,
as well as permitting Unefon to locate some of its transmission equipment at
Elektra store sites.
"Our alliance with Nortel is not only great news for Unefon, but also great news for
Mexico," commented Ricardo Salinas, President of Unefon and Chief Executive
Officer of TV Azteca. "I am confident that Unefon will permit millions of Mexicans to
purchase telephone service, improving the lives of all of our customers by giving
them access to modern communications. And this is only the beginning -- our goal
is to use our large spectrum to build a wireless information superhighway into every
Mexican home."
Unefon, Mexico's largest radio spectrum holder with capability to develop various
projects in wireless digital voice, data and image transmission, will begin
operations by the end of 1999. Unefon is a 50-50 joint venture between the Saba
family and TV Azteca. The Company will provide communication, information and
entertainment services; during its first stage it will offer wireless local phone
service. Unefon will be able to establish immediate market presence due to its
distribution agreement with Elektra (NYSE: EKT; BMV: ELEKTRA), Mexico's
largest specialty retailer, and its advertising agreements with TV Azteca (NYSE:
TZA; BMV: TVAZTCA), one of two broadcast television companies in Mexico.
Nortel Networks delivers value to customers around the world through Unified
Networks solutions, spanning mission-critical telephony and IP-optimized
networks. Customers include public and private enterprises and institutions;
Internet service providers; local, long-distance, cellular and PCS communications
companies, cable television carriers, and utilities. Nortel Networks' common shares
are listed on the New York, Toronto, Montreal and London stock exchanges. Nortel
Networks had 1998 revenues of US$17.6 billion and has approximately 70,000
employees worldwide.
SOURCE Unefon, S.A. de C.V.
/CONTACT: Jose Luis Riera, Director of Corporate Finance of Unefon
+011-525-449-5130, or jriera@unefon.com.mx; or Millicent White of Zemi
Communications, New York, 212-689-9560, or millicentw@zemi.com, for Unefon,
S.A. de C.V./
/Web site: http:// www.unefon.com.mx/ |
