SEE WHAT THE COMPETITION IS UP TO: (Very long article)
TELEFONICA PARTNERS WITH
WORLDCOM AND MCI.
03/09/98
Telef¢nica Partners with
WorldCom and MCI
Washington, D.C.(9/03/1998)-Telef¢nica de
Espa¤a, WorldCom and MCI announced today
they will partner to create international
strategic
business ventures. Telef¢nica's goal is to
increase its presence in Europe, to
consolidate its leadership position in the
Spanish speaking world and to expand its
investments in Latin America, mainly in
Brazil.
This new agreement will improve the
relationship already established in April
1997
with MCI.
"We have chosen the best partners to help
broaden our reach in Europe, consolidate
our
market leadership in the Spanish-speaking
world and move forward with new investment
opportunities in Latin America,
particularly in
Brazil, which will be our principle focus
during
1998," said Telef¢nica Group Chairman, Juan
Villalonga.
"This agreement recognizes that WorldCom's
strategy to deliver high bandwidth
end-to-end
service worldwide over its own facilities
has
proved powerful both to our customers and
shareholders," said Bernard J. Ebbers,
WorldCom president and CEO. "It also
acknowledges Telef¢nica's and MCI's
strengths in meeting the increasing demand
for
global connectivity for their multinational
customers. As partners, WorldCom,
Telef¢nica, and MCI will be better able to
enhance the short and long term growth and
value of the companies, given the rapidly
expanding global market opportunities."
Said Bert C. Roberts, Jr., MCI chairman,
"The
partnering of WorldCom, Telef¢nica and MCI
is a win for customers, representing a
strong
group of industry visionaries - each
bringing
value through facilities, reach and
product.
Today's announcement represents a new era
of communications competition in both
Europe
and the Americas - two regions which
account
for 70% of the global telecommunications
market and are increasingly open for
competition. Together, we will utilize
existing
facilities and build new networks in
emerging
markets to support the explosive growth of
communications services around the world."
HIGHLIGHTS
Opportunities in Europe
Telef¢nica will have an option to acquire
up to a
10% stake in a new company (initially
called
EuroCom), which will have the ownership of
the
network and operations of WorldCom in
Europe,
those currently existing as well as those
to be set up
in the future in certain countries,
including domestic
networks and the Pan-European network
Ulises.
Telef¢nica will have the right to
purchase up to
a 40% stake in a new company to be
created
by WorldCom International before
10/31/98,
which will comprise every WorldCom
business
in Italy. Additionally, Telef¢nica will
hold an
indirect stake through its 10% stake in
EuroCom.
WorldCom and Telef¢nica will form a
partnership to address
telecommunications
opportunities in European countries
where
EuroCom should not be present. This
venture,
to be managed by WorldCom, will be 51%
owned by WorldCom and 49% by
Telef¢nica.
EuroCom operations in Spain:
Telef¢nica and EuroCom shall agree the
interconnection of their networks to
offer
EuroCom services.
Distribution of EuroCom services:
Telef¢nica
will be the distributor of EuroCom
telecommunication services.
The parties may agree the possibility
to create a
joint-venture to offer voice and value
added
corporate services.
WorldCom International currently provides
telecommunications services on its own
facilities
throughout Europe including Belgium,
Germany,
France, Italy, Ireland, The Netherlands,
Sweden,
Switzerland and the United Kingdom.
Latin American Ventures
Telef¢nica Internacional and MCI will
operate
in the fast-growing Latin American
communications market through their
joint
venture Telef¢nica-Panamericana MCI
(TPAM), which is managed by TISA. Going
forward, this venture will be owned 51%
and
49% by Telef¢nica and MCI respectively.
The Latin American telecommunications
market
is currently valued at over US$50
billion and is
projected to grow to over US$67 billion
by
2000.
TPAM plans to build a state-of-the-art,
all-digital network to link major
business
centers throughout Latin America. The
network, which will consist of
high-speed fiber
optic cables and sophisticated
switching
equipment, will be designed to carry
vast
amounts of data and voice traffic. The
TPAM
network will be constructed in phases,
based
on customer demand as well as
regulatory and
business issues. By the year 2001, the
network
is expected to connect nearly a dozen
business
centers in Latin America with gateway
connections to MCI, WorldCom and
Telef¢nica facilities in North America,
Europe
and other parts of the world.
MCI will have the option to acquire a
10%
stake in TISA share capital, if the
latter is
opened to third parties or , in any
case, due in
June 2000.
Telef¢nica will acquire a stake in
Avantel, the
Mexican telecommunications company
owned
by Banamex and MCI, with the right to
appoint
a board director.
During 1998, TISA and its partners will
seek to
expand its leadership in the region by
taking
part in the privatization process in
Brazil. MCI,
with a presence in 17 countries in
Latin
America, is the second largest provider
of
international voice traffic and a major
provider
of international private lines between
the U.S.
and Latin America.
MCI and Telef¢nica also reaffirmed
their
commitment to provide systems
outsourcing
and integration services to business
and
Government customers throughout Latin
America. These activities will be
pursued by
50/50 joint ventures between TISA and
MCI
Systemhouse, MCI's systems integration
company.
New Venture Aimed at U.S. and International
Hispanic Market
MCI and Telef¢nica will create a 70
percent-30
percent new joint venture, managed by
MCI, to
provide customized products,
promotions,
marketing and customer service programs
targeting the U.S. Hispanic consumer
and small
business markets as well as the
international
Hispanic market.
The Hispanic market in the U.S. is the
fastest-growing demographic segment,
estimated at over 29 million people.
The
Hispanic telecom market roughly
represents
8% of the total U.S. long distance
market,
valued at $93 billion.
Puerto Rico
Subject to regulatory approvals, TISA
and
MCI will merge their existing
activities in Puerto
Rico and make it part of the TPAM joint
venture.
Global Services
The partners commit themselves to
negotiate a
Global Services Platform agreement and
a
agreement for Global Support Services
for
Spain and Latin America.
Telef¢nica will have the option to
participate up
to a 10% stake in the new MCI-WorldCom
global services company, if this
company is
created, subject to the approval of the
agreement abovementioned. Telef¢nica
will
have the right to participate in the
company
management.
Board Representation
The Presidents of the board of
Directors of
Telef¢nica and MCI-WorldCom will join
the
board of directors of each others'
companies.
Portugal Telecom
Telef¢nica, MCI and WorldCom have
agreed
with Portugal Telecom that the four
parties will
initiate detailed discussions aimed at
including
Portugal Telecom into the various
business
plans announced by Telef¢nica, MCI and
WorldCom today. The focus of these
arrangements will be to complement the
parties'
existing activities.
MCI-WorldCom Merger
In case the merger between MCI and WorldCom
does not go through, the strategic alliance
will
continued between Telef¢nica and WorldCom.
Telef¢nica de Espa¤a is among the world's
top ten
telecommunications companies and the
largest
provider of telecoms services in the
Spanish-speaking world. Through a network
of
affiliate companies in Spain and Latin
America,
Telef¢nica reaches a market of more than
300 million
people. Telef¢nica, which was completely
privatized
in February 1997, is Spain's largest
company, with
1997 annual revenues of $15.577 billion.
MCI is a leading provider of
local-to-global
communication services to business,
government
and residential users. The company's
fast-growing
portfolio of advanced data and IT services
now
accounts for nearly a quarter of MCI's
$19.7 billion
in annual revenue. MCI, with offices in
over 65
countries, operates one of the world's
largest and
most advanced digital networks, connecting
local
markets in the U.S. to more than 280
countries and
locations worldwide.
WorldCom is a global telecommunications
company, with 1997 annual revenues of $7.35
billion. Operating in more than 50
countries, the
company is a premier provider of
facilities-based
and fully integrated local, long distance,
and
international voice and data services.
WorldCom's
subsidiary, UUNET Technologies, Inc., is an
international provider of Internet services
throughout
the United States as well as in Canada,
Europe and
the Asia-Pacific region. WorldCom and MCI
announced a definitive agreement to form a
new
company called MCI WorldCom. The new
company will be uniquely positioned in the
U.S.
local and long distance markets as well as
the global
voice and data markets.
For further information please
contact with Investor Relations
Department at tel.: 34-1-5844700,
5844702 or 5840306 |
