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Telefonica to Acquire BellSouth's Latin American Cellular Operations
Posted: 08-Mar-2004 [Source: Telefonica]

[Telefonica Moviles adds 10 companies in 10 countries by acquiring all of BellSouth's cellular assets in Latin America.]

Madrid -- Telefonica, the world's sixth largest telecommunications company, has reached an agreement with BellSouth to acquire all its cellular assets in Latin America, which have a total of more than 10.5 million customers.

With the transaction, still subject to due diligence and the pertinent regulatory and governmental approvals, Telefonica will strengthen its leadership in Latin America, where it manages 21.6 million fixed lines and nearly 41 million wireless customers.

Telefonica's executive chairman Cesar Alierta expressed his satisfaction over the agreement, saying, "it is in line with the Company's policy of profitable growth, it creates shareholder value and adds a new potential market of nearly 90 million customers for the Group."

Under the signed agreement, the transaction values 100% of the companies acquired (firm value) at 5.850 million US dollars and will be financed from cash generated by Telefonica Moviles and debt. Telefonica and its mobile subsidiary shall both maintain solid credit ratios. Telefonica Moviles will assume the companies' net debt and it will acquire the shareholdings of BellSouth, offering minority shareholders the possibility of selling their stakes for an identical price. The acquisition in each country is subject to the respective regulatory approvals.

This agreement will bring Telefonica's customer base to well over 100 million customers worldwide, with an active presence in 14 countries in Latin America, making it the leader in both fixed and mobile telephony, with a 40% share of the Spanish- and Portuguese-speaking and 35% of the Latin American cellular markets.

Meanwhile, Telefonica Moviles' total customer base will increase to 62.5 million -- 41 million in Latin America -- cementing its leadership position in the Spanish- and Portuguese-speaking market and making it the fourth largest wireless operator in the world.

Telefonica Moviles will acquire 100% of BellSouth's stakes in its operators in Argentina, Chile, Peru, Venezuela, Colombia, Ecuador, Uruguay, Guatemala, Nicaragua and Panama, making it the only cellular operator in all the key Latin American markets (population over 421 million) and leaving it an excellent position to capture the region's strong growth potential.

Telefonica is acquiring companies with combined revenues in excess of 2,500 million US dollars, EBITDA of 867 million and an EBITDA margin of 35% in 2003. With this, Telefonica Moviles would have posted total aggregate revenues in 2003 of 5,401 million US dollars and EBITDA of 1,521 million US dollars in Latin America.


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