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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (1509)	4/7/1998 9:05:00 PM
From: Steve Fancy	Respond to of 22640

NTERVIEW-Brazil's Tess sees cellular phone surge Reuters, Tuesday, April 07, 1998 at 20:37 By James Craig SAO PAULO, April 7 (Reuters) - Brazil's Tess S.A., a consortium that includes Sweden's Telia 1/8TELI.CN 3/8, forecasts demand for cellular phones in nonmetropolitan Sao Paulo state will triple to 1.8 million in three years, an official said. "The potential demand is huge and we want to meet that demand," Jose Henrique Castanheira, president of Eriline Celular, a partner in the Tess group, said in an interview. Last week, Tess signed a contract with government for the B Band cellular license in the parts of Sao Paulo state outside the city's metropolitan area. The operating region, with a population of about 16 million, has an initial pent-up demand of some 600,000 units. That figure should balloon after the group begins operating its digital network in December, Castanheira said. Tess expects to invest $400 million in three years to implement its network. Castanheira also said Tess aimed to list shares on local stock markets at the end of 1999. "We haven't set a date, but we expect to go to the market one year after we start operating," he said. Since June, the Brazilian government has sold eight of its 10 B Band concession licenses as part of its ambitious drive to privatize the country's massive telecommunications sector. Tess won bidding on the so-called B Band area No. 2 license with an offer of 1.326 billion reais ($1.2 billion). Last week it paid an initial 530 million reais and has three years to pay the balance. It also announced a $360 million, three-year "turnkey" contract with Ericsson Telecomunicacoes SA (SAO:ERI_.P), the Brazilian arm of Swedish equipment supplier AB LM Ericsson (SWED:LME.B). Castanheira said Tess would likely seek financing in domestic and overseas markets to pay the remainder it owes on the license and for cash to build its network. Talks between the consortium and the National Development Bank's investment arm, BNDESPar, over its possible participation in the group are expected to be completed this month, he said. "There is great interest on our part and on the part of BNDESPar," Castanheira said. Meanwhile, a local newspaper has reported that CR Almeida had pulled out as a partner in the Tess group, selling its 39 percent stake to Brazil's Algar group. The report could not be immediately confirmed. Before winning the area No. 2 tender, Tess lost two bids for cellular phone licenses in Brazil, one for a concession covering the northeastern states of Bahia and Sergipe, and the second for six small northeastern states. Copyright 1998, Reuters News Service