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To: Jon Koplik who wrote (19559)	12/11/1998 11:25:00 AM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 152472

Brazil- Q bidding on business 2:13 PM ET 12/10/98Brazil "mirror" phone licenses see tepid interest By Shasta Darlington SAO PAULO, Dec 10 (Reuters) - Five months after Brazil's spectacular $19 billion sale of telephone monopoly Telebras, an economic recession threatens to squelch competition for licenses to develop parallel telephone companies. Companies interested in buying one of the four "mirror" concessions to operate competing fixed-line and long-distance networks must hand in proposals on Friday. "The best we can hope for is a relative success," said Marcelo Mollica, an analyst at Banco Icatu in Rio de Janeiro. "At one point, the talk was of raising $6 billion for these concessions. Now if they're sold at all, the auction will be considered successful," he said. Brazil will have to be content to raise something between the minimum target price of $180 million and $1 billion in today's market conditions, analysts said. The auction already has been pushed back a month and a half. Some of the concessions, slated to go on the auction block on Jan. 15, have attracted more interest than others. Sprint Corp. , the United States' third largest long-distance carrier, is expected to team up with British energy company National Grid Group to bid on a concession to develop a long-distance operator, analysts said. The new company would compete against Embratel , the existing long-distance company bought by MCI Communications Corp. during the July privatization of Telebras after a head-to-head round of open-outcry bidding against Sprint. "What is definite is that this company will be sold," Mollica said. "What's left to be seen is if there will be morethan one bidder." Brazil's Banco Bradesco , Safra financial group and media group Globo are expected to join Atlanta-based BellSouth Corp. to bid on at least one of the threefixed-line concessions. The favorites are the license to operate in Sao Paulo and the concession in the North-Northeast region. The group owns the license to operate parallel cellular service in Sao Paulo. Groups are allowed to buy more than one fixed-line "mirror"concession. Other companies that could participate in the auction include telecoms equipment maker Qualcomm Inc. , France's state-controlled France Telecom , Telecom Italia and Brazilian industrial giant Vicunha. A global cash crunch, sparked by financial crises in Russia and emerging markets in Asia, combined with Brazil's own questionable economic outlook have dampened interest in bidding on the concessions, analysts said. "The Telebras companies had the promise of an existing cash flow that could help finance investments," Mollica said. "In this case, the government is only selling licenses that will require a lot of investment and no cash flow at the beginning. Financing is fundamental," he added. Groups will present their proposals to Brazil's telecom watchdog agency Anatel on Friday. The technical proposals, such as how fast the network will be built out and how many cities it will reach, will count for 70 percent of the evaluation and the offered price only 30 percent. Anatel set "referential" target prices that it would like to see met or beaten. The long-distance license is seen raising at least 40 million reais, the Sao Paulo fixed-line license 70 million reais, the North-Northeast region 60 million reais and the southern region 60 million reais. The parallel cellphone company licenses were sold last year before Telebras' privatization. ((Sao Paulo newsroom, 5511 248 5408, shasta.darlington@reuters.com))