Here's a long piece of info about what's happening in various overseas telephone markets. Picked this up on a different thread. There is a little included about Brazil.
Forbes Article - Retevision and Lucent
While rumors swirl about what Lucent may do in the U.S., the company's real
future lies in global expansion.
"Disruptions help us"
By Scott Woolley
THE WALL STREET BUZZ on Lucent Technologies these days is all about what big
data-communications company it may soon buy. Rumored targets include
AscendCommunications and 3Com. This to better take on Cisco Systems in
networking gear as voice and data converge in a huge telecommunications
market.
But while the headlines focus on what the $30 billion (worldwide sales) Lucent
may do in the U.S., the real action for Lucent is overseas. Its goal is to
become a major player in no fewer than 55 countries.
The stakes are huge. The worldwide market for the stuff Lucent sells was $380
billion last year. The company figures that number will hit $650 billion by
2001, a 71% rise in four years.
Lucent's chief executive, Richard McGinn—who joined AT&T as a salesman in
1969—hopes to capture a big chunk of that increase. He's on his way. Last-
quarter overseas sales—which account for one-fourth of total sales—were up
41%. Domestically, they rose just 17%. Although McGinn won't give a firm
target for international sales growth, he says the majority of Lucent's
opportunity lies outside the U.S.
McGinn's timing is very good. Traditionally foreign suppliers like the French
giant Alcatel or government-owned entities such as Japan's NTT once had a
stranglehold on local markets. No more.
Thanks to a wave of deregulation, there are more than 1,000 new overseas phone
companies, all hungry for the latest equipment. International long distance
tariffs are being driven down courtesy of a new World Trade Organization
agreement. Formerly state-owned telephone monopolies—Germany's Deutsche
Telekom, Japan's NTT, Brazil's Telebras— must contend with upstart
competition. Daniel Stanzione, Lucent's chief operating officer, puts it this
way: "Disruptions help us."
In Spain full telecommunications competition is scheduled to begin Dec. 1.
Lucent recently completed a $45 million long distance network for Retevision,
a small competitor looking to take on Spain's version of AT&T, the giant
Telefonica S.A.
But Telefonica, a sleepy monopoly no more, is a much larger potential customer
for Lucent. And not just in Spain, where it needs the latest equipment to keep
pace with Retevision and others. Telefonica just won numerous bids to provide
cellular and wired phone service in Brazil. Of the $4 billion it intends to
dole out in contracts over the next four years, Lucent is likely to win a big
share.
"In any market where an incumbent begins to face competition we have an
opportunity to challenge their relationship with their existing supplier,"
says Stanzione. And in most cases the company can sell to both sides.
Might Telefonica get irked at Lucent's aid to Retevision? "That underestimates
the maturity of the company's leadership," scoffs Bernardus Verwaayen, who
runs Lucent's international operations. . .
forbes.com
The Spanish Telecommunications Market
The Spanish market of telecommunication services is currently living one of
its most dynamic periods. After the liberalisation of mobile telephony and the
majority of services (data transmission, leased lines, cable, telephony for
closed user groups, radiomessaging, etc.), the activity of the sector is
clearly marked by the forthcoming liberalisation of basic telephony. Although
Spain (as well as several other European countries) was given an additional
five-year period until 2003 before opening basic telephony to competition, the
complete liberalisation will take place on December 1st, 1998.
On June 1996, the Spanish Government passed a law that created a second
licence for operation of the basic telephony service. This licence was given
to Retevisión, a public company that now carries TV signals. Retevisión will
transfer most of its infrastructure and personnel to a new public subsidiary,
called Retevisión SA, which will become the second operator of basic telephony
in Spain. After its creation, expected for December 1996, 80% of the new
operator company will be privatised. The value of this 80% share is estimated
in 400 million ECU. Retevisión SA will start its activities in the summer of
1997, about one year and a half before the total liberalisation date. The law
created also a Telecommunication Market Commission, which will supervise the
liberalisation process and the competence among telecommunication operators in
Spain.
The progressive liberalisation of telecommunication services has attracted the
interest of some of the most important financial and industrial groups in the
country. These groups are taking positions both in the capital of new
operators and in the capital of Telefónica, which is currently involved in a
privatisation process. This participation has evolved from occasional
investments in some activities, to organised plans considering
telecommunications as a diversification path from the core business of the
companies. This new focus, together with the advances in the liberalisation
calendar, is forming a new view of the telecommunications sector in Spain,
with two different emerging groups: the companies supporting Telefónica, and
the companies taking part in an organised competition, which currently invest
together in mobile and cable services.
For example, Banco Central Hispano and Banco de Santander, two important banks
that currently form part of Airtel Móvil (see below) have already expressed
their interest in participating in the privatisation of Retevisión SA. BT,
which collaborates with Banco de Santander in the data service company BT
Telecomunicaciones and in Airtel, could also take part in the new operator,
but France Telecom or other international partners are also possible. It is
estimated that the new operator will have to invest around 2,500 million ECU
to compete with Telefónica.
In addition to Telefónica and Retevisión SA, cable companies and new operators
that enter the market after December 1998 will be allowed to compete in the
provision of basic telephony. However, some studies indicate that in ten years
from now Telefónica will still keep more than 90% of the basic telephony
market.
infowin.org
ilesp.html
February 1998
A New Step for the Liberalization of the Telecommunications Market in Spain
By Joan Garcia-Haro, Spain
Under the deregulation and liberalization process established and boosted
within the European Union, new telecommunications opportunities are appearing
in Spain. Spain is the eleventh largest market in the world for
telecommunications equipment and services and may be the eighth largest by the
year 2000. However, the country does not have a major domestic
telecommunications manufacturer, and is therefore very attractive to many
international telecom manufacturers. Until competition began to arise in Spain
with the authorization of the second mobile telephony operator, TELEFONICA de
España ran the market in a monopolistic way and had complete control of the
information technology industry. Now TELEFONICA is almost totally privatized
and will face a new competitor, RETEVISION SA, which holds the second
telecommunications license to operate in Spain.
A 60 percent stake in RETEVISION was recently sold by the Spanish Government
as part of the effort to open this interesting market. Also, RETEVISION
provides a foothold in Europe's carved up telecom market. RETEVISION was the
public entity in Spain responsible for the transmission of public and private
radio and TV signals, having a coverage close to 100 percent of the
population. It was also in charge of the public telecommunication system and
gave other services such as business networks.
RETEVISION has an important experience and operational infrastructure. It owns
a terrestrial wideband digital network of 140 Mb/s able to transport all types
of signals. It is the main operator of the Spanish satellite system
(HISPASAT). It is going to deploy a terrestrial digital video and audio
broadcasting system. Likewise, RETEVISION is diversifying its activities,
increasing the non-audiovisual ones, renting transmission capacity, and giving
data services over frame relay and ATM to mobile telephony operators, news
agencies, banking firms, and other communications companies. Since its
creation in 1989, RETEVISION has obtained economical benefits that are
increasing each year.
In this frame three company consortia submitted bids to control RETEVISION.
One was made up of Banco Central Hispanoamericano (one of the biggest banks in
Spain), France Telecom, and Sprint Corp. Another was led by ENDESA (the major
electricity company in Spain) and the Italian operator Stet (Union Fenosa,
Euskaltel, and six saving banks are also in this consortium). The third was
the German group Mannesmann.
The best economical offer for 60 percent of RETEVISION was a key issue, and
the ENDESA-Stet group was the winning consortium by offering 116,359 million
pesetas in front of the 84,000 million pesetas of the BCH, France Telecom, and
Sprint Corp. consortium, even though they presented the best technological
proposal. This second operator created around RETEVISION will start operating
this year, and the competition with TELEFONICA should lower the tariffs,
having a positive impact on the user and on the Spanish economy.
comsoc.org
Long-Distance Rates Drop In De-Monopolized Spain
January 24, 1998
On Friday Retevision SA started offering long-distance telephony services at
lower rates in Spain as the first competitor in Grupo Telefonica de Espana
SA's 74-year-old monopoly.
Retevision, which is currently not able to process local or cellular calls,
claims that its rates on interprovincial and international calls are 25% lower
than those of state-run Telefonica. Retevision hopes to further attract
customers by waiving connection and monthly charges for the first year.
Currently customer can use both services without having to change telephones
or numbers.
Retevision plans in the next 10 years to invest $2.5 billion, to establish
over 1 million lines and to attract 2.6 million customers. Retevision expects
this customer target to generate annual billings of $1.63 billion to $1.77
billion (250 billion pesetas to 270 billion pesetas).
Retevision, which was a state-run company itself, was purchased last year by a
consortium lead by Spanish electricity company Empresa Nacional de
Electricidad SA (Endesa), Spanish electronics group Union Electrica Fenosa SA
and Italian telecommunications company Telecom Italia SpA. (Stet).
Wall Street Journal 1/23/98
cmcnyls.edu
Retevision chose Sema Group Telecoms to revamp and upgrade its new-generation
network management system, based on a regional/national, fully-distributed
system of network management platforms.
The project - a first using this particular technology - was completed in
tight timescales and enabled Retevision to improve service for corporate
customers and to facilitate the integration of new equipment into the network.
semagroup.com
STET and Endesa to buy 60% of Retevision
Publication Date: 27/07/97
Synopsis: The Spanish Government has chosen a bid from the consortium headed
by STET the Italian telecoms group and Endesa the Spanish electricity utility.
The 700 million Ecu bid is for the purchase of 60% of Retevision, the state-
owned TV signal transmitter. STET and Endesa plan to invest 390 million Ecu
for a further 10% stake in Retevision, and it will become Spain's second
telecoms operator in competition with Telefonica.
According to Retevision, it plans to have a telecoms network in place in 12
major Spanish cities by the end of the year, in 50 cities by the end of next
year and have nationwide coverage by 2000. It hopes by this time to have
achieved a 10% market share in Spain. It is expected that the Spanish
authorities will proceed with the privatisation of a 67% stake of Endesa by
the end of the year.
The European Commission has taken the decision to move to the second stage of
formal infringement procedures against the Spanish government as regards its
legislation on pay-TV and digital TV services. The EC will send a so-called
"reasoned opinion". The European Commission's move follows Spain's incomplete
and unsatisfactory response to a "letter of formal notice" sent by the
Commission. The Commission must receive a response from the Spanish government
within a month stating that it has removed the provisions of the law which
could have potential adverse effects on the development of the digital TV
market in Spain.
Original Source: ISPO: Information Society Trends
tagish.co.uk
More on Retevision and more than I have posted here.
infowin.org
The Privatisation of Retevisión
Retevisión is the company that owns the second licence for the basic telephony
service in Spain. Currently, Retevisión broadcasts TV signals to 12,000,000
homes and has 1,220 employees. In 1996, the company had 36,616 million pesetas
in revenues and more than 3,000 million pesetas in profits. 70% of Retevisión
was scheduled for privatisation on July 1997, with the remaining 30% to be
sold during 1998.
Although for some time the general interest in Retevisión seemed low (due to
delays in the privatisation process and the advance of the full market
liberalisation mentioned above), the BT-MCI-Telefónica alliance changed the
situation completely. When the period for presentation of candidates to buy
Retevisión was closed at 2 pm on April 21st, four consortia had presented
their offers (one of them did it by fax just minutes before the time limit).
The four consortia, which include five of the ten largest telecommunications
companies in the world, were:
Banco Central Hispano (BCH); France Telecom, Deutsche Telekom, and Sprint (the
three are members of Global One); and Renfe (the Spanish railway company,
which has about 2,000 Km of fiber and plans to install another 6,000 Km).
Endesa and Union Fenosa (electricity companies, with 10,000 Km of fiber);
Telecom Italia; Euskatel (a telecommunications company of the Basque Country),
and several banks including Guipuzkoa Donostia Kutxa and BBK - Bilbao Bizkaia
Kutxa.
AT&T and Mannesmann
Unisource
Some of the companies competing for Retevisión in different consortia have
other common interests: for example BCH, Endesa, and BBK are partners in
Airtel; AT&T and Unisource are together in Uniworld and World Partners, and
Telecom Italia was a candidate to replace Telefónica in Unisource. Recently,
AT&T and Telecom Italia have signed an agreement to compete with BT-MCI-
Telefónica in the Latin American market.
The process until the effective privatisation of Retevisión took several
months (acceptance of candidates, April 29th; changes in consortia admitted
until May 12th; final offers by accepted candidates until June 9th; winner
known 60 days later). After several changes, only two consortia presented
their offers for Retevisión: the group led by BCH and France Telecom (Deustche
Telekom left in May), known as Opera, and the one led by Endesa and Telecom
Italia. Finally, the winner was the group of Endesa and Telecom Italia, mainly
because their economic offer was almost a 40% higher than the offer of Opera
(and for that matter much higher than the initial estimations of Retevisión's
value). The total cost of the 70% share of Retevisión for the winning
consortium is around 181,000 million pesetas.
Consequences for the Spanish Domestic Market
In addition to its impact on the Latin American and global telecommunications
markets discussed above, the new strategic alliance of Telefónica has shaken
the Spanish telecommunications sector.
Unisource and AT&T, formerly partners of Telefónica, have entered the race for
the second telecommunications operator to be built around Retevisión. The
position of BT is strongly criticised due its alliance with Telefónica and its
simultaneous participation in Airtel, the second GSM operator, which today is
the only important competitor of Telefónica. Airtel is now limited to the GSM
market, but the company has the potential to become also a fixed telephony
operator after the full liberalisation of the service.
The new alliance has of course affected Unisource too. Telefónica's
contribution to Unisource was Telefónica Transmisión de Datos, a company with
an estimated value of 65,000 million pesetas. Unisource and Telefónica started
to negotiate the terms under which the Spanish company would leave the
alliance. Initially, Unisource did not consider the participation of a new
partner in place of Telefónica (its 25% percent share would be divided in
equal parts among the three remaining companies Telia, Swiss Telecom, and
KPN), but AT&T favoured Telecom Italia as a good candidate to join the group.
Finally, the alliance with BT-MCI has given Telefónica the opportunity to
establish a link with Portugal Telecom. The Spanish company wanted an
agreement with the Portuguese one in order to compete in the Brazilian market.
A few months ago, Telefónica Internacional (TISA) obtained a 35% stake of CRT,
a company privatised last year by the Brazilian state Rio Grande du Sol.
The two operators will exchange equity and participation in their respective
boards. Telefónica will take an approximate 3% stake in Portugal Telecom, and
Portugal Telecom will take a 1% stake in Telefónica. Later this year, users in
both countries will get a first tangible benefit of this agreement:
international calls between Portugal and Spain will be charged at domestic
tariffs.
Retevisión announced basic telephony services with reduced prices in twelve
big Spanish cities for December 1997. Changes in the Spanish telephone
numbering plan scheduled for April 1998 will allow users to select the
operator they prefer for local and for long-distance calls. Meanwhile,
Telefónica is not inactive. Already in September, the company started to
reduce its tariffs, announcing significantly reduced prices for international
calls and several special tariffs for its clients, even including unlimited
free national calls during nights.
Retevisión expects to reach 1 million telephone lines in 10 years (on June
1997, Telefónica had almost 16.5 million lines in service) with a total
investment of 360,000 million pesetas in that period. The company wants to
compete also in the mobile telephony market, either by establishing an
alliance with Airtel or by applying for a third mobile operator licence.
By Enrique Vázquez Gallo and Jesús Redondo Velasco, DIT-UPM, 12.09.1997 |
