PCS Auction Canceled for Lack of Interest
Brazil’s telecommunications regulator, Anatel, was forced to cancel the first of three bidding auctions for nine new PCS wireless network licenses. Serranby, a consortium controlled by Brazilian investment fund Opportunity, was the only group to present a bid. Anatel disqualified Serranby from the auction because the company had not deposited the necessary guarantees. Anatel was hoping to sell one license per region per auction for a total of nine new concessions for the north, south and São Paulo metropolitan regions. Interest in the much-anticipated auctions has been waning, especially by international providers.
Portugal Telecom and Telefónica Unite in Brazil
Two of Brazil’s largest wireless telecommunications providers, Telefónica Móviles and Portugal Telecom signed a $10 billion joint venture pooling together subscribers to lock in 43% of Brazil’s 22 million cellular phone users (see “Punching Above Its Weight”). Neither company has signed on to bid in Brazil’s PCS auctions. British cell phone operator Vodafone also pulled out of the first-round auction and is looking at possible acquisition targets instead. Anatel prohibited fixed-line companies from presenting bids at the first auction.
Second-Round Brazilian Licences Sold
In the second round of PCS auctions, Tele Norte Leste (Telemar), one of Brazil’s largest telephone company, purchased a license to offer mobile PCS services in the northern region for $550 million. The second-highest bid was presented by Telecom Italia Mobile for $495 million. With the northern license, Telemar gains access to 16 northern and northeastern states where the company already provides fixed-line telephone service. Anatel hopes to raise at least $3.4 billion through PCS licenses. The next auction is scheduled for March 20.
Meanwhile, Telecom Italia Mobile paid $1.54 billion for two operating licenses in Brazil during the second PCS auction. It purchased one license covering the São Paulo metropolitan area and one for southern Brazil. The company wants to become the largest nationwide wireless provider in Brazil. It already provides serves the states of Paraná and Santa Catarina in the south, and covers the entire northeastern coastal region. Telecom Italia Mobile cell phone provider Maxitel also operates in Minas Gerais, Bahia, and Sergipe. Telecom Italia also has a minority stake in Brasil Telecom, a fixed-line provider in the south and in Brasília. Telecom Italia is Brazil’s third-largest cellular phone company with 3.9 million customers. Spain’s Telefónica Móviles is the largest with 4.6 million, followed by Portugal Telecom with 3.9 million. BellSouth’s BCP is the country’s fourth-largest provider with 2.5 million subscribers.
Telecom Américas Acquires Brazilian Wireless Operator
Telecom Américas, a joint venture between Bell Canada International, Mexican América Móvil, and US-based SBC Communications, bought Tess, a wireless communications start-up in the state of São Paulo, for $950 million. Telecom Américas is getting 62% of Tess’ shares from Sweden’s Telia. Telecom Américas already provides wireless and broadband telecommunications services in Brazil, Argentina, Venezuela, and Colombia. In Brazil, it operates ATL in Rio de Janeiro and Espírito Santo, Telet in Rio Grande do Sul, and Americel in the mid-western regions of the interior. Telecom Américas is Brazil’s fifth-largest cellular phone provider with 2.2 million customers.
Impsat Expands Deal with Brasil Telecom
Argentina’s Impsat Networks, a provider of broadband telecommunications and data center services in Latin America, announced the expansion of its contract to provide broadband Internet access through Brasil Telecom. Impsat will provide Internet access in Brasil Telecom’s concession area in the city of Curitiba and southeastern portions of the country. Impsat will in turn provide Brasil Telecom with access to its international Internet backbone through a direct connection from Curitiba to the US.
AOL Latin America Gets Recapitalized
America Online Latin America, the Spanish- and Portuguese-language Internet company, is receiving $150 million in fresh capital form its three main shareholders. America Online and Venezuela’s Cisneros Group agreed to invest an additional $130 million in the portal. Brazil’s Banco Itaú, which owns 12% of the company, agreed to invest $20 million in common “A” stock. Since its Nasdaq IPO last August, AOL Latin America’s share price has fallen to under $5 from $8.43.
Another Portal Bites the Dust
Quepasa.com, an Internet portal aimed at Spanish-speaking audiences in the US and Latin America, called it quits after its stock tumbled to less than 11 cents from an IPO price of $17.13 in June 1999. The company hopes to sell the portal and wholly owned business-to-business subsidiaries realestateespanol.com, etrato.com, and credito.com. Prior to the board’s decision to liquidate, Quepasa had cut headcount by two-thirds to 20 in November.
BSCH and Others Fund OfficeNet
Buenos Aires-based OfficeNet, an office supply and B2B procurement site, received $34 million in second-round financing from Banco Santander Central Hispano, Latin American Enterprise Fund and Latin Rim Fund. The company began operations in 1997 with an initial investment of $7 million. OfficeNet now operates in Brazil and hopes to expand in Chile.