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TELEFONICA, PORTUGAL TELECOM NOW MAJOR POWERS IN BRAZIL

WASHINGTON-Almost 500 years after Columbus visited, Portugal and Spain are back on Latin American shores; this time, it isn’t sugar cane or gold they are after, but rather the potentially lucrative telecom sector. Telefonica de Espana and Portugal Telecom were the most aggressive bidders in the Telebras privatization that took place on 29 July despite demonstrators and lawsuits by the opposition.

Eight cellular companies, along with three fixed-line and one long-distance holding, were sold in what was the largest transfer of state telecom assets to private hands in the world. The cellular companies fetched US$6.99 billion, almost three times the minimum price of US$2.4 billion. Telefonica, Portugal Telecom and its partners were the main winners of the auction, having acquired three cellular companies and control of Telesp Participacoes S.A., the fixed-line operator serving the coveted state of Sao Paulo. Globalally MCI Communications Corp. offered the highest bid for long-distance operator Embratel.

“These acquisitions give Telefonica tremendous coverage in Brazil,” said Mindel De La Torre, president of the Washington, D.C.-based Telecommunications Management Group. “With its alliance with Portugal Telecom, they control both wireline and wireless in Sao Paulo, in addition to offering wireless service in the neighboring states of Rio de Janeiro, Espirito Santo, Bahia and Sergipe. When you add MCI and Embratel to the equation, you have incredible synergy and strategic power.”

Earlier in June, Telefonica acquired control of state-owned Companhia Riograndense de Comunicacoes (CRT). According to auction rules, because of its acquisition of Telesp Participac

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