SAO PAULO, Brazil-In early January, by starting operations as a “mirror” company of fixed-line carriers Telefonica and Telemar, Vesper faced a challenge in the Brazilian market. The company planned to compete with operators installed in 17 states, with an objective of ending the first year with more than 2 million installed lines.
Three months later, Vesper reached an average of 180,000 lines installed per month and announced additional investments to expand into the data transmission segment. The catalyst for this growth was the decision to use wireless local loop (WLL) technology to rapidly gain users and extend coverage.
Controlled by the groups Bell Canada (35.5 percent), Velocom (35.3 percent), Qualcomm (16.6 percent) and SLI International (12.6 percent), Vesper is operating in the biggest 44 Brazilian cities with plans to reach 70 cities by the end of this year. Mirror companies were established in 1998 to compete with fixed-line carriers using WLL technology.
Executive Vice President Rafael Steinhauser said, “Our commitment with Anatel foresees the installation of more than 4 million lines within the next three years, and WLL is one of the ways we have chosen [to accomplish] this.”
The company’s plans, however, were threatened during its early operations because it mistakenly set prices too high. During the first month of operations, Vesper offered lines at prices three times higher than competitors Telefonica and Telemar. In February, the company lowered its fares and started to quickly gain subscribers.
To meet its commitments with Anatel, the company lined up vendor financing valued at almost US$1.8 billion for the next five years. For the 16 states where the company competes with Telemar, a package of US$1 billion for financing equipment was agreed upon with Nortel Networks, Harris and Ericsson. About US$600 million of this amount was designated for network construction in all 16 states.
For this region, the concession contract signed by the operator foresees the installation of 1.68 million lines this year, reaching a teledensity of 6.37 lines for each 100 inhabitants. According to the contract, the number of lines must reach 2.3 million in 2001, with a teledensity of 6.95 lines. At the end of 2002, 3.3 million lines must be installed, and a teledensity of 9.78 lines must be reached.
For the state of S
