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To: r.edwards who wrote (4846)	1/5/2000 8:21:00 PM
From: Ruffian	Read Replies (1) \| Respond to of 13582

Brazil Vesper Starts Svc With Higher Prices Than Rival By MARGARITA PALATNIK SAO PAULO -- Vesper SA, a new basic telephony provider with a concession covering much of northeastern Brazil, Wednesday launched operations in two northern states with higher prices than the incumbent carrier. Vesper expects to roll out its network - made up mostly of Wireless Local Loop technology - to cover 29 cities by Jan. 24. Vesper's concession covers 16 states, but it started with Amapa and Roraima states. "The logic is to start by the two smallest capitals in the smallest regions" so that kinks detected may be ironed out before moving on to large cities like Rio de Janeiro, Vesper Chief Executive Officer Gilberto Garbi said in a telephone interview. Garbi stressed that the pricing and marketing efforts of the Competitive Local Exchange Carrier - as new competitors like Vesper are known - will initially be aimed at people currently waiting for their first or second phone lines, and for those seeking quality currently lacking in Brazilian phone lines. Sign-up fees will vary between 286 reals ($1=BRR1.8520) and BRR386, with several options including pre-paid plans and corporate offerings. Vesper's concession competes with incumbent Tele Norte Leste SA (TNE), marketed under the Telemar brand, while a sister company in Sao Paulo, also seen launching service by Jan. 24, will compete with Telesp SA (TSP), a unit of Telefonica SA (TEF). A three-minute call in Rio de Janeiro state will cost BRR0.1639, 3.47% more than the BRR0.1584 charged for same call at peak hour by Tele Norte Leste, a Vesper spokeswoman said. Analysts noted that considering Brazil's significant pent-up demand, Vesper can afford to "skim" customers, charging as much as the market will bear, at least for the first six months. "At BRR50 reals for sign-up just in Sao Paulo state demand could add up to 4 or 5 million lines," noted Deutsche Bank analyst Regio Martins, adding that such estimates are tough to pin down. Sao Paulo state has a population of about 35 million people. Not To Go After Competitors' Customers Garbi said fees were determined "taking into account what we invested building out our huge network, which covers 65% of the country's territory." He said that so far $600 million have been invested in installing a network comprised of 18 switching centers and 410 radio base stations. Another $600 million will be invested in 2000, and up to $500 million in 2001. The company already employs a staff of 800, Garbi said. Garbi conceded that sign-up prices will come down soon. "If you look at what happened with cellular activation costs in Sao Paulo in the past year, they're down by half," he noted. But for now, the novelty of digital lines and of services such as as caller I.D., call forwarding and voice mail - all possible thanks to Vesper's entirely digital network, will be the hook to attract new customers. "We're not necessarily trying to steal away from the incumbent. We're not telling them drop Telefonica and buy my line, and we're not going for churn," Garbi stressed in reference to the practice of making customers switch providers. Garbi declined to project number of customers or revenues per subscribers. Vesper will also target certain upscale pockets within its concession cities for deployment of fiber optic cable, instead of WLL, to allow for certain value-added services such as broadband access. "We're not married to any technology," Garbi said. "The advantage of WLL is that you can deploy fast and cover a big city like Rio de Janeiro, but in certain niches we will go with fiber optic." Vesper is owned by a consortium made up of VeloCom and Bell Canada International (BCIC) with 34% each, Qualcomm Inc. (QCOM) with 16%, and other Argentine and Brazilian investors with the remaining stake. Following VeloCom's placement of $250 million in private equity announced Wednesday, Garbi acknowledged that Vesper's partners are contemplating their market options. "Sooner or later we'll go to the stock exchange," Garbi said. -By Margarita Palatnik; Dow Jones Newswires; (5511)813-1988; mpalatnik@aol.com