Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Vesper -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (34)	11/21/2002 6:54:30 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 56

WSJ -- Qualcomm Pumps More Cash Into Brazil To Defend Mkt Share. November 21, 2002 Qualcomm Pumps More Cash Into Brazil To Defend Mkt Share By MIKE ESTERL Of DOW JONES NEWSWIRES NEW YORK -- Qualcomm Inc. (QCOM) is ramping up its commitment to troubled Brazil as it scrambles to keep its technology alive in Latin America. The San Diego-based company surprised many observers by agreeing this week to spend $85 million for three wireless operating licenses in a bid to expand its foothold in a potentially lucrative market. It's the latest sign that foreign investors, after steering clear of Brazil amid policy uncertainty and solvency concerns ahead of last month's elections, are again plunking down hard cash following market-friendly assurances from the country's president-elect. A lot is at stake in particular for Qualcomm, though, which is trying to ensure that its patented CDMA or code division multiple access, technology enjoys a long life in Latin America's biggest nation - and across the rest of the region. "As Brazil goes, it determines how the rest of Latin America goes," said Duane Nelles, Qualcomm's director of finance, adding that his company only has to pay 10% of the $85 million up front for the concessions. Wireless carriers around the globe are choosing CDMA or a competing technology, known as GSM or global system for mobile communications, as they upgrade capabilities. But while many telecommunications providers in developed countries have already cast their votes, the battle has barely begun south of the Rio Grande. "What is particular to Latin America is that there are a lot of operators that are still in the decision-making process," said Juliana Abreu, an analyst at Pyramid Research, a consulting group in Massachusetts. The number of cellular subscribers in Brazil alone should reach 34 million by the end of this year, up from less than 15 million three years ago, and is expected to increase further to 50 million by 2005, according to Pyramid. Wireless penetration in Latin America's 18 biggest markets, currently at just under 100 million, is seen topping 140 million by 2005. The struggle for market share has pulled Qualcomm in some unusual directions in Brazil, where it has already invested $750 million. Its stake in a local carrier, Vesper SA, has ballooned to 86% from 15% since the upstart was launched in early 2000. The big equity stake is the result of two foreign partners having bailed out, forcing Qualcomm to ditch its typical business model of providing technology to carriers instead of owning them. Vesper remains a bit player on the Brazilian scene, with just 500,000 subscribers. Ironically, the company was only able to provide fixed wireless services in Brazil until it corralled three of nine new operating licenses up for grabs on Tuesday. More importantly, though, the regional licenses complement those held by Telefonica SA (TEF) of Spain and Portugal Telecom SA (PT), the only two major players in Brazil at this time who use CDMA technology. By snapping up licenses in the Sao Paulo, Minas Gerais and Northeast regions, Qualcomm has mapped out a CDMA network that almost spans the entire country, something that GSM already boasted through Telecom Italia Mobile SpA (I.TIM). That could keep Telefonica and PT in the CMDA camp, and convince other carriers to sign up, according to Roger Oey, a telecommunications analyst with BBV Brasil in Sao Paulo. "The important thing is that CMDA is not going to die in South America," he said. Qualcomm's Nelles confirmed that his company is eager to sell its stake in Vesper and get back to its core business of selling technology. "Our goal is to seed CDMA," he said. What isn't clear though, is whether Qualcomm may have to pump more money into Vesper in the interim to keep GMS from winning the day - and the San Diego company isn't providing any guidance. "We could be very aggressive, and that would cost several hundred million dollars, or we could be conservative," said Nelles. -By Mike Esterl, Dow Jones Newswires; 201-938-4026; mike.esterl@dowjones.com Updated November 21, 2002 6:36 p.m. EST Copyright © 2002 Dow Jones & Company, Inc. All Rights Reserved.