Telefonica Brazil to enforce 1500 job cuts (Brazil)
Telefónica is a Spanish broadband and telecommunications provider in Europe and Latin America. Operating globally, it is the third largest provider in the world. According to reports, Telefonica Brazil will enforce 1,500 job cuts as part of its integration with mobile operator Vivo Participacoes.
As per the Sao Paulo state telecommunications workers union, this number represents around 7 per cent of the company’s work force and will be done on a voluntary basis. The company was initially planning around 2,000 job cuts, but brought done the number owing to a negotiation with the union.
Further, reports reveal that the people leaving the job will be awarded a compensation package.
The company is yet to make an official statement about the same.
Telefonica to invest US$14.6 billion in Brazil
Spanish telecom giant Telefonica will invest US$14.6 billion in Brazil over three years (2011-2014).
This represents an increase of 52% over the last four years.
The company increased its investment to tap the growing demand for telecommunication services in Latin America. We believe Telefonica continues to invest in growth and transformation projects, fostering the development of broadband services (both fixed and wireless).
Latin America is one of the best performing regions and remains the principal growth region for Telefonica with a penetration rate of 99% at the end of fiscal 2010. The company reported solid growth in Latin America in the recently concluded quarter.
Brazil was the largest contributor to Latin America’s revenue that improved roughly 55% in the fourth quarter of 2010. Further, Telefonica bolstered its position in the country after acquiring the full stake in Vivo Participa§µes in October 2010. Vivo generated a massive 150% growth in revenue in the recently concluded quarter.
The consolidation of Vivo makes Telefonica the leader in Brazilian telecom market. It enables the company to offer full competitive bundled service and enhances its competitive position against America Movil. Telefonica merged Vivo with its Brazilian fixed-line voice and broadband unit Telesp, which is struggling to perform.
Telefonica is the leading telecommunications company in Spain by customer accesses, which has now become saturated with the penetration rate of more than 100%. We believe Telefonica’s dominant position in the Spanish telecom market and the strengthening position in the Brazilian market make it attractive for investment. The stock retains a Strong Buy rating with the Zacks #1 Rank for the short term (13 months).
However, for the long term, we are maintaining our Neutral rating as Telefonica remains challenged by a weak Spanish economy and ongoing reduction in mobile termination rates. We are also concerned about the company’s highly leveraged balance sheet, increasing competition (especially in Brazil and U.K.) and regulatory involvement, all of which may limit upside potential of the stock.
Telefonica expects tripling of Brazil 3G access in 2011
Telefonica SA desires to almost triple the number of Brazilian cities that have access to its 3G service by the end of next year. The company plans to end this year with US$2.7 billion of investment in the country.
According to Chief Executive Antonio Carlos Valente, Telefonica plans to reach 2,830 municipalities by the end of next year, after ending this year with 1,050 municipalities served by 3G systems. The company’s focus will be on quality for next year, increasing the index of client satisfaction. A big focus will be on developing broadband.
According to Telefonica, which owns Vivo Participacoes, Brazil’s biggest mobile-phone company by market share, investments this year held steady from the US$2.6 billion it invested in 2009. Valente adeed that he still doesn’t have an estimate for how much Telefonica will invest in 2011.
Anatel leads with H Band mobile auction (Brazil)
Anatel, Brazil’s telecoms regulator has reportedly rejected petitions to permit existing mobile operators to participate in the upcoming auction of H Band 3G mobile spectrum.
Earlier this year, Telemar Norte Leste (Telemar, or Oi) and SindiTelebrasil, an association representing local telephony companies, each submitted petitions to block the forthcoming auction of the H Band spectrum.
According to reports, with Anatel looking to start the tender to allocate the country’s last planned award of frequencies for 3G mobile services on 14 December, the two parties cried foul at the watchdog’s decision to prevent current operators Oi, TIM Brasil, Vivo Participacoes and Telecom Americas (Claro) from participating, saying it had failed to justify the reasons for their exclusion.
In their appeals, SindiTelebrasil and Oi argued Anatel was acting as a bar to competition and hampering the rapid launch of 3G services.
Telefonica raises bid for Portugal Telecom stake in Vivo
www.WirelessFederation.com/news: Bid has been increased by Telefonica Spain for Portugal Telecom’s indirect stake in their 50:50 Brazilian mobile joint venture Vivo Participacoes to EUR6.5 billion, while earlier the telco has offered EUR5.7 billion (USD8.1 billion) to Portugal Telecom.
The offer of improved bid has also been confirmed by PT. According to Portugal telecom, Telefonica’s revised offer comes in the shape of two alternative plans: the first would see the immediate sale of PT’s entire 50% holding, while the second option would see the sale triggered at PT’s discretion at some point during an agreed three-year period
A meeting was conducted by the board of PT to discuss the improved offer and that while they consider it does not reflect the strategic value of the Brazilian asset, have decided to call a shareholders’ meeting to discuss the offer in full.
Portugal Telecom might accept Telefonica offer if bid rises by $7b
www.WirelessFederation.com/news: Portugal telecom has signaled that it might accept more than the 5.7 billion euros ($6.9 billion) on offer, thus bringing Telefonica SA an inch closer to clinching the purchase of the Portuguese company’s stake in their Brazilian joint venture. Earlier the company had described the bid as low and opportunistic and before that it called its stake in Vivo Participacoes SA, Brazil’s largest wireless operator, strategic, suggesting a sale wouldn’t be considered.
Telefonica Chairman Cesar Alierta has been trying to merge Vivo with Telecomunicacoes de Sao Paulo SA, or Telesp, the Spanish company’s fixed-line unit in Brazil and for this purpose; it has been trying to gain control of it since at least 2006. Telefonica even threatened to curb Portugal Telecom’s ability to pay dividends, seeking to force it to the negotiating table.
According to Chief Executive Officer Zeinal Bava yesterday, the current valuation Telefonica is putting on the Vivo asset is low, and it think it’s opportunistic, clearly taking advantage of the fact that southern Europe is having one of its worst crisis for the last three decades. However, even if Telefonica raise the price, taking over Vivo will be an uphill task. Telefonica is facing rivals in the form of Vivendi SA and America Movil, controlled by Mexican billionaire Carlos Slim, in Brazil, where it is seeking growth as demand at home cools.
Depending upon the performance by Vivo in 2009, Brasilcel is due to pay a dividend of €111m each to Telefonica and Portugal Telecom this year. Vivo had 30 percent of Brazil’s 179 million wireless subscriptions at the end of March and Vivo has driven revenue growth for Portugal Telecom as growth in Europe slows and competition increases at home.
In case the offer fails Portugal Telecom’s ability to secure Vivo dividend payments via Brasilcel might be blocked by Telefonica and this move has been called attempted blackmail by Portugal telecom.
Portugal Telecom hails Telefonica offer for Vivo as insufficient
www.WirelessFederation.com/news: Portugal Telecom has announced that 5.7 billion- euro ($7 billion) offered by Telefonica for its stake in their Brazilian joint venture is clearly insufficient. Earlier, the Portuguese company had described its holding in Vivo Participacoes SA, Brazil’s largest wireless operator as strategic and a fundamental growth pillar.
Spanish company’s offer for the stake was rejected by its board on May10 but the latest comment by the SGPS SA Chief Executive Officer Zeinal Bava suggest that the Lisbon-based company may be holding out for a better price.
Telefonica Chairman Cesar Alierta has been trying to merge Vivo with Telecomunicacoes de Sao Paulo SA, or Telesp, the Spanish company’s fixed-line unit in Brazil and for this purpose, it has been trying to gain control of it since at least 2006. Telefonica even threatened to curb Portugal Telecom’s ability to pay dividends, seeking to force it to the negotiating table.
Analysts also feel that Telefonica should raise its offer to 7.5 billion euros. Telefonica and Portugal Telecom jointly own Brasilcel, a holding company with a controlling stake in Vivo. In case the offer fails, Portugal Telecom’s ability to secure Vivo dividend payments via Brasilcel might be blocked by Telefonica.
Depending upon the performance by Vivo in 2009, Brasilcel is due to pay a dividend of €111m each to Telefonica and Portugal Telecom this year. Vivo had 30 percent of Brazil’s 179 million wireless subscriptions at the end of March and Vivo has driven revenue growth for Portugal Telecom as growth in Europe slows and competition increases at home.
Telefonica Brazilian fixed-line phone business, Telesp is also underperforming amid increased competition and the telco wants to improve its position by merging Vivo and Telesp so that it can secure €2.8bn of cost savings. Due to Portugal Telecom’s skepticism about the merger, Telefonica had to make an offer to buy the Portuguese company out of Vivo.
Telefonica & Portugal Telecom court investors for Vivo (Brazil)
www.WirelessFederation.com/news: Spanish telecoms giant Telefonica is in a process to convince major shareholders to accept its offer for Portugal Telecom (PT’s) 50% stake in their Brazilian mobile joint venture, Vivo Participacoes. Major PT shareholders include US-based Brandes Funds (which owns 9% of PT) and Blackrock Inc (2.3%).
A road show designed to persuade major PT shareholders is intended to be launched by Telefonica to line up behind its EUR5.7 billion (USD7.2 billion) bid for control of Vivo. Telefonica is making efforts to unlock the latent potential of the fast-growing Brazilian communications market and control of the cellco is seen as pivotal for its ambition.
Telefonica has appointed Swiss investment bank UBS AG to work alongside long-term adviser Credit Suisse Group, to convince the Portuguese otherwise and PT on the other hand has brushed off its erstwhile partner’s advances, with Portuguese Prime Minister Jose Socrates going further to describe Brazil as a key market and Vivo as a strategic asset.
Telefonica aims better ties with Telesp & Vivo (Brazil)
www.WirelessFederation.com/news: In order to improve its weakening position in Brazil, Spanish telecoms behemoth Telefonica has reportedly expressed its desire to strengthen the relationship between its Brazilian fixed line unit Telefonica Brazil (Telesp) and Vivo Participacoes.
Vivo Participacoes is the Sao Paulo-based mobile operator it jointly owns with Portugal Telecom.
Earlier, the Brazilian unit was considered to be one of the most profitable zones for Telefonica but currently it is going through a very rough phase, struggling amid intense local competition. Telefonica has claimed to improve its trading position by seeking closer integration between Telesp and Vivo which in turn can generate improved cost savings.
No comment has yet been received from Telefonica and Portugal Telecom.
Anatel warns operators to prove their 3G capacity in Brazil
www.WirelessFederation.com/news: Brazil’s telecommunications regulator Anatel said that it will continue to veto the aggressive promotions of broadband Internet services of the operators. It warned the telco’s to prove that their networks can cope with the demand for mobile broadband services.
There has been an extensive expansion of broadband Internet services on mobiles with 20% increase in the clients taking the tally to 7.9 million in the month of October itself and is expected to reach 10 million by the end of the year.
The warning was issued amid this rapid expansion and in order to facilitate this growing demand, Anatel may also authorize network sharing between operators.
The local unit of Mexico’s America Movil SA and market leader in the Brazilian market, Vivo Participacoes and Claro along with other operators has decided to share infrastructure in order to face enormous investments in infrastructure in the coming years.
