Lat Am Telecom Wrap: Brazil Awards Telecom License

FORT LAUDERDALE, FLA. (08/31/99) - Brazil has awarded a license to provide fixed-line telecommunications services in its southcentral region to Global Village Telecom (GVT) NV, an affiliate of the company, Gilat Satellite Networks Ltd., announced today.

Brazil's government now has completed the first phase of introducing competition in three fixed-line regions of the country. When it privatized the state telecommunications company last year, the government divided Brazil into three regions for fixed-line telephony. Each region now has one newcomer and an incumbent. In each case, the incumbent is a former unit of the state telco, Telebras, which was privatized in mid-1998. [See "MCI Buys Stake in Brazil's Long Distance Telco" July 29, 1998.] This duopoly arrangement will last until 2002, when competition will be broadened.

The government launched the effort to grant the four newcomer licenses -- three for regional fixed-line service and one for long-distance service -- shortly after the Telebras privatization. In January of this year, Sprint won a license to compete against the former state-owned long-distance carrier Embratel, which was bought by MCI WorldCom during the Telebras auction. [See "Sprint Enters Brazil's Long-Distance Market" Jan. 18.] Competition already existed in Brazil's cellular market, which is comprised of eight regions. Brazil, Latin America's largest and most populated country with about 170 million people, has a penetration only of about 10 telephone lines per 100 people, according to estimates from the government and market research firms.

The region for which GVT won the license has a population of 38 million people and encompasses nine states, including the country's capital, Brasilia, Gilat said. GVT plans to invest about US$550 million over the next three years to build a network with 500,000 lines, according to Gilat. The duration of the license is 20 years, according to published reports.

GVT will compete against the former Telebras unit Tele Centro Sul, which is owned by a consortium led by Telecom Italia.

Other international telecommunications providers backing carriers in Brazil include AT&T Corp., Spain's Telefónica Internacional, Bell Canada, France Telecom SA, Portugal Telecom and Bell South.

GVT, which is based in the Netherlands and has its main offices in Israel, focuses on the Latin American telecommunications market. It already provides services in Chile, has a license to offer long-distance service in Perú and plans to roll out services in Guatemala, México and Colombia, according to information in the company's Web site.

Gilat, in Petach Tikva, Israel, can be reached at http://www.gilat.com/. GVT can be reached at http://www.gvtele.com/.

In other news about Latin America's telecommunications market:

-- L.M. Ericsson Telephone Co. won a $200 million contract to build a Wireless Local Loop (WLL) network for Brazilian carrier Mirror S.A., the company announced today. The project involves the use of Ericsson base stations and a variety of services. Ericsson, in Stockholm, Sweden, is at http://www.ericsson.com/.

-- SBC Communications Inc. announced last week that it has completed its acquisition of Cellular Communications of Puerto Rico, a wireless carrier that serves over 366,000 customers in Puerto Rico and the U.S. Virgin Islands. SBC is at http://www.sbc.com/.

-- Lucent Technologies Inc. bagged a $300 million contract last week to build a network for carrier Presto Telecomunicaciones in México. The fiber optic network will link 32 states and have the potential of serving 85 percent of the country's population. México had a population of about 98 million people in mid-1998, according to the U.S. Central Intelligence Agency Factbook. Lucent will start to build the network in the fourth quarter of this year. Lucent, in Murray Hill, New Jersey, can be reached at http://www.lucent.com/.

-- Telefónica de Argentina, one of Argentina's two dominant carriers, announced on Monday that it will resell Cidco Inc.'s MailStation, an appliance designed to send and receive e-mail and intended for people who don't have and don't want to get a PC. Telefónica plans to sell the appliance in the retail stores managed by its telephone equipment subsidiary Telinver SA. Telefónica, in Buenos Aires, Argentina, can be reached at http://www.telefonica.com.ar/. Cidco, in Morgan Hill, California, can be reached at +1-408-779-1162 or http://www.cidco.com.