BellSouth Wins Bid for Cellular Service in Brazil
A BellSouth Corp.-led group on Wednesday paid a hefty $2.45 billion for the right to provide a second mobile-telephone service in Sao Paulo, Brazil, Latin America’s largest urban telephone market.
BellSouth will pay more than four times the minimum price set by the government in an auction of the rights to offer cellular service in Sao Paulo. The bid was almost $1 billion more than the next-highest offer by a group led by AT&T; Corp.
“This is, without question, a landmark award for us,” said Charles C. Miller, president of BellSouth International. “Sao Paulo is one of the most densely populated cities in the world. The growth potential for this market is simply staggering.”
Sao Paulo is the third-largest city in the world.
The concession, which covers the 17 million people who live in greater Sao Paulo, didn’t come cheap. The bid amounts to $144 per potential customer. By contrast, BellSouth recently paid as much as $49 per potential customer for a license to operate wireless services in Columbus, Ohio.
The price may not appear excessive, however, if BellSouth can attract the legions of frustrated Brazilians who wait, on average, two years to get a fixed-line phone from Telecomunicacoes de Sao Paulo, the local state-controlled phone company. Also, for each of the current 500,000 users of mobile phones in the Sao Paulo area, there are three more people waiting to acquire cellular service.
BellSouth’s group, which includes the O Estado de Sao Paulo media group; Grupo Safra, a Brazilian banking and industrial group; and Splice, a Brazilian telecommunications equipment maker, won the right to operate service for the next 15 years. Atlanta-based BellSouth was one of seven groups that bid for the region.
BellSouth shares lost $1.25 to close at $45.25 on the New York Stock Exchange.
BellSouth and Safra Group have a 46% stake each in the company, called BCP, that will own the Sao Paulo concession. The remaining 8% is divided between the O Estado de Sao Paulo group and Splice. BCP will compete for customers with Telecomunicacoes de Sao Paulo, which had enjoyed a monopoly.
