Teléfonos de México (Telmex), Latin America’s largest telephone company, is venturing into the Brazilian telecommunications market through a $3.5 billion alliance with Bell Canada. Telmex plans to build a high-speed Internet network in Brazil with an $850 million investment over a three-year period. Bell Canada will contribute $450 million to the project. Telmex and Bell Canada are combining their operations in the region. Brazil has the largest and one of the fastest-growing Internet markets in Latin America, and competition has intensified sharply. Telecom Italia recently paid $810 million for a 30% stake in globo.com, a portal controlled by Organizações Globo, Brazil’s largest media company.
Both Telmex and Bell Canada presently hold significant assets in South America. Bell Canada has a stake in Vésper, a fixed-line telephone provider in Brazil, Canbras Communications Corporation, a cable television provider in São Paulo and Rio de Janeiro, and Comunicación Celular, a wireless provider in Colombia. Telmex has a large stake in Algar Telecom Leste, a wireless provider in Rio. SBC, one of the leading telecommunications providers in the US, which presently owns 8.5% of Telmex and 20% of Bell Canada, announced its plans to hold an initial 12% in the South American venture. Telmex and Bell Canada have also expressed interest in bidding for a mobile phone concession in Brazil in the next licensing round.