Mexican heavyweights give up on Venezuela
Telegeography writes…Am©rica M³vil (AM) and its sister company Tel©fonos de M©xico (Telmex) have agreed to scrap their joint plan to buy a USD677 million, 28.5% stake in Venezuelan fixed line operator CANTV from US-based Verizon Communications. The contract will be cancelled within days, AM’s CEO Daniel Hajj said yesterday. The Mexican company added in an e-mailed statement that Verizon had agreed to end the deal. The news leaves Verizon on its own to negotiate with Venezuela’s government over its assets after President Hugo Ch¡vez last month declared his intention to nationalise CANTV. Ch¡vez has implied that he will not pay market price for Verizon’s stake, and may deduct the value of pensions owed to former workers. In April 2006 AM agreed to buy Verizon’s telecoms interests in Venezuela, the Dominican Republic and Puerto Rico for a total of USD3.7 billion. It completed the acquisition of Verizon’s 100% stake in Verizon Dominicana for USD2.062 billion and is waiting for clearance from the US regulator the FCC to purchase a 52% interest in Telecomunicaciones de Puerto Rico (PRT) for USD939 million, expected by the end of March. AM has agreed with Verizon to extend an offer to all other PRT shareholders to purchase their shares at the same price per share paid to Verizon.
Telmex, America Movil call off Cantv buyout
Telecompaper writes…Mexico-based telecoms operator Telmex and America Movil have announced they are calling off plans to buy a stake in Cantv. The pair had agreed in April 2006 to buy the shares owned by Verizon and the deal’s expiry date was postponed three times. In a statement, Telmex said the firm and America Movil had decided along with Verizon to abandon the purchase because it was unlikely government backing would be received. Although Telmex has said the Puerto Rican and Dominican Republican governments have approved the purchase of local affiliates from Verizon, Venezuelan President Hugo Chavez has said he will re-nationalise Cantv.
America Movil gains 10.8 million subscribers in Q4
Telecompaper writes…Latin American operator America Movil added a net 10.8 million new mobile subscribers in the fourth quarter, including some 2.1 million from its takeover of Verizon’s activities in the Dominican Republic. The group finished the year with 124.8 million mobile customers, plus another 2.9 million fixed-line users. Subscriber growth was the strongest in its home market of Mexico, followed by Brazil and Argentina. Revenues for the quarter rose 19.2 percent from a year earlier to MXP 65.36 billion, and EBITDA improved 65 percent to MXP 24.41 billion. Net profit was down 27.6 percent to MXP 10.89 billion due to foreign exchange losses and financing costs. Net debt was at MXP 67.6 billion at year end, or 1.2 times annual EBITDA.
Analysis: The negative impact of Cantv nationalization
Venezuelan President Hugo Ch¡vez’s plans announced Monday to nationalize the country’s incumbent fixed line operator Cantv has cast a shadow over the future of the company, the telecoms market and foreign investment, analysts say.
Ch¡vez said Monday he would seek to re-nationalize Cantv, as well as energy assets, and strip the country’s central bank of its independence from the Venezuelan government in a bid to aggressively move the country towards a socialist system.
In a press statement on Monday, Cantv said it was aware of Ch¡vez’s announcement, but had not been contacted by any government official and had no other information to share.
For Jos© Otero, president of telecoms consultancy Signals Telecoms Consulting, if one looks at the unsuccessful management of Venezuela’s state-run telco, CVG Telecom, the potential nationalization of Cantv does not look promising.
A state-run telco can function quite well if in the right hands, for example, Antel in Uruguay. However, based on the track record of the Ch¡vez administration in the telcoms market and specifically with CVG this is not the case in Venezuela, Otero told BNamericas.
“Nothing that [CVG] promised when first launched has been completed… they are a monument to failure,” Otero added.
LACK OF TRANSPARENCY
What’s more, the lack of transparency in how the government handles CVG’s operations is a bad omen for how it might handle Cantv.
Ch¡vez’s government recently came under fire for politically charged regulatory decisions, involving the refusal to renew the broadcast license of Radio Caracas Televisi³n for supporting the failed 2002 coup against him.
In an analyst report, Carlos Constantini of Deutsch Bank also sees negative implications of nationalization.
“We believe the implications for VNT [Cantv] could be dramatic, depending on the nationalization model adopted,” he said.
In the best case scenario, Constantini says Ch¡vez may only demand more government voting rights within Cantv, and only partially nationalize the company, therefore allowing the proposed purchase of shares by Mexican mobile holdings group Am©rica M³vil to go ahead.
With a fully nationalized Cantv, the main risk for the telecoms market could come in the form of heavily subsidized services and equipment coming from the central government, something that would make it difficult for other private companies to compete, Otero said.
In this case, it would especially affect the level of investment in telecoms infrastructure, with private investors looking elsewhere in the face of such uncertainty. With a lack of investment, the telecoms market in Venezuela could fall behind the pace of growth of its neighbors, Otero added.
Venezuela has traditionally had one of the highest mobile telephony penetration rates in Latin America. In the third quarter of 2006 GSM industry association 3G Americas put it at 67%, joint second with Argentina, with Chile in first place with 77%.
Constantini also sees foreign investment as being negatively affected, but doubts that Ch¡vez will simply take over all assets because employees and retirees own 5.3% of the company.
Guilherme Paiva, also an analyst with Deutsche Bank, considers it likely that Ch¡vez will at least partially compensate Cantv’s current ownership, to maintain his local popularity.
“Expropriation without compensation could have a negative impact on President Ch¡vez’s popularity. However, we expect Ch¡vez’s rhetoric will likely strengthen,” Paiva said in a separate report.
VERIZON-AMX DEAL
Am©rica M³vil had been planning to jointly buy 28.5% of Cantv with its sister company Telmex from US telco Verizon, but now the future of AMX’s plan in the country is unclear, as is the US$21.50 ADR tender offer, according to Deutsche Bank. When they announced the planned tender offer Am©rica M³vil/Telmex estimated they would pay US$676mn, or US$284.50 per subscriber.
The deadline for the deal was extended to February 28 just last week and other portions of Am©rica M³vil’s planned buyout of Verizon assets throughout Latin America have already been completed. The sale of Verizon Dominicana was finalized in early December.
Some believe that Cantv’s current stakeholders would get a fair deal from the government in the event of nationalization due to provisions in Venezuelan law.
“Venezuela’s capital markets law says that shareholders should be paid a fair value for their shares in any buyout,” Miguel Octavio Vegas, executive director for BBO Servicios brokerage in Venezuela, told Bloomberg News. BBO possesses Cantv shares in its mutual fund.
Cantv was privatized in several phases between 1991 and 1996. The government still holds about 20% of the company’s capital in “golden” shares.
América Móvil extends CANTV purchase deadline
Mexican mobile group Am©rica M³vil (AM) has extended the deadline to acquire a stake in Venezuela’s fixed line incumbent CANTV to 28 February 2007, the company said in a filing with US securities regulator the SEC. The previous deadline was 29 December 2006. AM and its sister telco Telmex have jointly agreed to buy 28.5% of CANTV from US communications group Verizon, and ultimately aim to buy out all other shareholders in the operator. Acting on its own, AM closed the purchase of Verizon Dominicana last month, whilst it is waiting for regulatory approval for its planned purchase of Verizon’s 52% stake in Telecomunicaciones de Puerto Rico. The three deals are worth an estimated USD3.7 billion. The CANTV deal has stalled partly because the Venezuelan firm is awaiting a ruling from the government on the exact amount it owes former employees.
Source- telegeography Wireless Mobile Telecom
Cingular Wireless sues telemarketers for calls to customers
Cingular Wireless has filed three lawsuits to stop telemarketers from making unsolicited and illegal calls to Cingular customers.
The lawsuits were filed in the U.S. District Court in Atlanta. Cingular, one of the leading wireless operators nationwide, seeks injunctions and damages in all three lawsuits.
Cingular is the largest wireless company in the United States, with more than 54 million subscribers who use the nation’s largest digital voice and data network. It is a subsidiary of Atlanta-based BellSouth Corp. and at&t Inc., whose merger was recently approved.
In one lawsuit, Cingular alleges that Sebell Telecommunications LLC of Miami made unsolicited marketing calls to Cingular subscribers through the use of an automatic telephone dialing system and a prerecorded message actions expressly prohibited under the Telephone Consumer Protection Act and other laws.
Autodialing systems store or produce telephone numbers to be called using a random or sequential number generator.
Cingular alleges that Sebell conspired with a company in the Dominican Republic, called Florida Vacation Corp., to make the telemarketing calls that occurred in June and July.
Cingular originally filed a “John Doe” lawsuit on this matter in August. It has now amended the earlier complaint by identifying defendants discovered through Cingular’s ongoing investigation.
Cingular’s second lawsuit alleges that American Broadcast Systems Inc. of Seattle, used an autodialing mechanism to send prerecorded messages about “free vacations” to Cingular customers.
In a third lawsuit, Cingular alleges that Go2Prepaid LLC of Miami also made unsolicited prerecorded telemarketing calls to Cingular customers using an autodialing mechanism.
Cingular claims that Go2Prepaid worked in connection with Alo Hispanos of Bogota, Colombia, to make the calls.
Source- http://www.dmnews.com
