Telefónica Buys Assets From Motorola
Telefónica Móviles, the cellular phone unit of the Spain’s largest telecommunications company, Telefónica, agreed to buy stakes in several Mexican mobile phone companies owned by Motorola. The deal, estimated to be worth about $2.6 billion, will give Telefónica a foothold in the Mexican cellular market, making it the country’s third-largest mobile operator with over one million cellular phone subscribers. The move builds on Telefónica’s existing investment in Mexico by enabling it to expand wireless Internet services in conjunction with its Terra Networks unit there.
The Spanish telecom is also purchasing Motorola’s 36% stake in Brazil’s Global Telecom, the company’s 25% stake in Honduran Celtel, and a 27% stake in Tricom in the Dominican Republic. The Mexican purchase and other acquisitions were announced just weeks before Telefónica launches its IPO for Telefónica Móviles, underscoring the extent of Telefónica’s growth plans in Latin America, where it has spent almost $35 billion to become the region’s largest foreign phone company.
Brazilian Cellular Market Draws More European Investors
Siemens AG says it will invest more than $700 million in Brazil’s mobile phone market over the next three years. Siemens hopes to gain a 25% market share for its handsets and equipment designed for the new Brazilian cell phone standard based on a 1.8 gigahertz frequency. Siemens expects the 19 million cellular phone users in Brazil to grow to 58 million by 2005. The German company plans to use its existing facilities in Brazil as a base for expansion throughout the region. According to research by Dataquest, revenue from Latin America’s wireless industry should climb from $22 billion this year to $40 billion by 2005.
As further evidence of the growth expected in Brazil’s mobile market, the European Investment Bank (EIB) announced a $50 million loan to Brazil’s Telpe Celular, owned by Telecom Italia Mobile, to help expand the company’s network in northeastern Brazil. The floating rate loan is capped at Libor plus 15 basis points, and is repayable in six installments over five years after a two-year grace period. Earlier this year, the European Union’s EIB financed a similar venture for Brazil’s TLC.
Lucent Signs Brazil Optical Networks Deal
Lucent Technologies signed a $180 million contract with Eletronet, Brazil’s leading supplier of bandwidth for communications companies, to provide optical networking systems there. Lucent will build Eletronet’s backbone network to cover 11 states and Brasília with an optical fiber network that will have the capacity to transmit approximately 80 million one-page e-mail messages per second.
Eletronet is a venture formed in August 1999 by electric utility AES of the US and Brazil’s Lightpar to build an optical communications network throughout the country. Lucent, a leading producer of broadband and mobile Internet infrastructure, communications software and opto-electronics, has been expanding its operations in Latin America where it now has more than 5,000 employees in 20 countries and manufacturing facilities in Brazil, Mexico and Venezuela.
Marconi Buys Splice
Marconi, the United Kingdom’s largest producer of telecommunications equipment, acquired the transmission division of Splice do Brasil, a contract manufacturer of Marconi’s products for network operators in Brazil. The British company is paying $64 million in cash immediately, and $105 million over three years if Splice meets certain performance targets. Splice will continue to be run by its Brazilian management team. Marconi said the acquisition would strengthen its position in the Brazilian network switching and transmissions products market and give it a complete telecoms equipment portfolio in Latin America. The Brazilian market is expected to be worth about $30 billion over the next three years.
SportsYA! Cost Cutting Spurs Lay Offs
In an effort to consolidate operations and cut costs, the Internet sports portal SportsYA!, aimed at Latin America, Spain and US Hispanics, announced a 25% staff reduction. The layoffs follow its purchase of the Element 7 sportswear brand. SportsYA! recently raised $10 million in fourth-round financing from its investors IMG/Chase Sports Capital, Ventech, Chase Capital Partners and Flatiron Partners, to be spent on sales and marketing. The Miami-based SportsYA! has offices in Argentina, Brazil, Uruguay, Mexico and Spain.
BellSouth Moves Into Guatemala
BellSouth launched cellular telephone service in Guatemala in October, the 11th market in Latin America to be served by the US-based wireless communications leader. The service will be offered initially in Guatemala City and rolled out nationwide within the next year. BellSouth’s partner in the Guatemala license is Panama-based Multi Holding Corporation. Guatemala is Central America’s largest economy and its $19 billion GDP represents roughly a third of the region’s total. BellSouth and its various corporate and public-sector partners, including BCP in Brazil, Tele 2000 in Peru and Telcel in Venezuela, have wireless licenses covering more than 247 million potential subscribers in Latin America. In addition to Guatemala, BellSouth operates in Argentina, Brazil, Chile, Colombia, Ecuador, Nicaragua, Panama, Peru, Uruguay and Venezuela.
Banorte Teams Up With ZonaFinanciera
Grupo Financiero Banorte, Mexico’s fifth-largest financial group, announced a strategic partnership with the Internet financial portal ZonaFinanciera.com. The alliance gives ZonaFinanciera’s English-, Spanish- and Portuguese-speaking users full access to Banorte’s financial products and services such as loans, checking and savings accounts, investments, credit cards and insurance. The partnership with Zona enables Banorte to expand its online presence beyond Mexico to new markets in the US and throughout Latin America, and provide its customers with more reliable and secure Internet banking ³operations. It will also allow the bank to integrate any technological innovation developed by ZonaFinanciera.com into its service platform.