Latin Finance - September/October 2010 - 71

Brazil telecoms

Mobile Scramble
by Vincent Bevins

I

n late July, Telefónica finally wrapped up a lengthy – and expensive – quest to buy Portugal Telecom(PT) out of a mobile venture in Brazil, and will now be able to integrate it with fixed-line services. Not willing to leave Latin America’s biggest market behind, PT involved embedded realistic expectations of large synergies, and used part of the proceeds to buy a share in Oi, Brazil’s only major PT didn’t want to lose control. At the moment, Vivo and Tim national telecoms provider. [Telecom Italia’s local mobile operation] are trading at around Not to be outdone, Carlos Slim’s empire shortly afterwards four times Ebitda. AMX [Mexico’s América Móvil] is trading close sent a clear signal of its own major consolidation plans for Brazil. to seven,” he says. And now, there is speculation that UK-based Vodafone may be eyeing the local operations of Fixed Versus Mobile Mobile Subscriber Base, By User (1,000s) Telecom Italia, which controls The second is that in Brazil’s At 94% penetration the other major mobile service expanding market, companies in Brazil. are taking advantage of new 200,000 The scramble reflects two laws that allow consolidation, 185,135 major trends. The first is familiar 180,000 and adjusting to the increasing enough to almost be cliché: importance of mobile services, 160,000 emerging markets are seen to as fixed-line offerings take a 140,000 be powering world economic back seat. 120,000 growth and offer much more “It’s become pretty clear in 100,000 room for expansion than every emerging market in the 80,000 developed markets, say analysts. world that the way to provide Brazil population= 193.0 million Brazil’s economy is expected 60,000 voice coverage on a quasito grow by over 7% this year, universal basis is mobile,” says 40,000 and José Sócrates, prime Michel Morin, director of LatAm 20,000 minister of Portugal, made it equity research at Barclays. 0 clear he would not allow PT to “And, if you look at 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 exit a market which provided broadband penetration in Source: Goldman Sachs, Anatel such a high proportion of sales, Latin America, broadband is no matter what shareholders approaching levels comparable thought. And the high price Spain’s Telefónica paid – more to PC penetration of households. The device in the home is than PT’s entire market capitalization, valuing Vivo, their joint becoming somewhat of a barrier. Mobile phone penetration venture, at around 11 times Ebitda – proves just how crucial it of people is getting close to 100%, however.” So companies thought integrating Brazilian services would be. are looking more and more to mobile operations as a means of “Everybody is starting to realize that all of the companies in supplying internet, he says. Brazil have the ability to generate a tremendous amount of cash,” For the last few years, Vivo, run jointly between Telefónica says Lucio Aldworth, a telecoms equity analyst at Goldman Sachs and PT, has been the market leader – and the best run, analysts in São Paulo. “There’s a tremendous value to buying [Brazilian say – of Brazil’s mobile brands. But Telefónica was unable to telecoms] assets and by every single standard they are cheap.” integrate it with Telesp, its lagging fixed-line operation. Telesp is However, Aldworth concedes that the Telefónica deal was dominant in São Paulo state, the country’s most populous, but all expensive. “Eleven times Ebitda [for Vivo] was a lot, but that other states are dominated by Oi, which also runs the country’s

Ownership of Brazilian telecoms is in flux, reflecting elevated foreign interest as well as expansion on the ground. Consolidation has several more acts to run.

September/October 2010

LatinFinance 71



Table of Contents for the Digital Edition of Latin Finance - September/October 2010

Latin Finance - September/October 2010
Contents
Investment Banking Fees
Stanley Motta
Compensation Survey
Bill Rhodes
Private Equity Fees
Investing in Venezuela
Argentine Borrowing
Brazil Investor Report
Inside Banco do Brasil
Mexico Investor Report
Temasek talks LatAm Strategy
Latin Finance - September/October 2010 - Latin Finance - September/October 2010
Latin Finance - September/October 2010 - Cover2
Latin Finance - September/October 2010 - Contents
Latin Finance - September/October 2010 - 2
Latin Finance - September/October 2010 - 3
Latin Finance - September/October 2010 - 4
Latin Finance - September/October 2010 - 5
Latin Finance - September/October 2010 - 6
Latin Finance - September/October 2010 - 7
Latin Finance - September/October 2010 - 8
Latin Finance - September/October 2010 - 9
Latin Finance - September/October 2010 - 10
Latin Finance - September/October 2010 - 11
Latin Finance - September/October 2010 - Investment Banking Fees
Latin Finance - September/October 2010 - 13
Latin Finance - September/October 2010 - 14
Latin Finance - September/October 2010 - 15
Latin Finance - September/October 2010 - 16
Latin Finance - September/October 2010 - 17
Latin Finance - September/October 2010 - 18
Latin Finance - September/October 2010 - 19
Latin Finance - September/October 2010 - 20
Latin Finance - September/October 2010 - 21
Latin Finance - September/October 2010 - Stanley Motta
Latin Finance - September/October 2010 - 23
Latin Finance - September/October 2010 - 24
Latin Finance - September/October 2010 - 25
Latin Finance - September/October 2010 - Compensation Survey
Latin Finance - September/October 2010 - 27
Latin Finance - September/October 2010 - 28
Latin Finance - September/October 2010 - 29
Latin Finance - September/October 2010 - 30
Latin Finance - September/October 2010 - 31
Latin Finance - September/October 2010 - 32
Latin Finance - September/October 2010 - 33
Latin Finance - September/October 2010 - Bill Rhodes
Latin Finance - September/October 2010 - 35
Latin Finance - September/October 2010 - Private Equity Fees
Latin Finance - September/October 2010 - 37
Latin Finance - September/October 2010 - 38
Latin Finance - September/October 2010 - 39
Latin Finance - September/October 2010 - 40
Latin Finance - September/October 2010 - 41
Latin Finance - September/October 2010 - Investing in Venezuela
Latin Finance - September/October 2010 - 43
Latin Finance - September/October 2010 - Argentine Borrowing
Latin Finance - September/October 2010 - 45
Latin Finance - September/October 2010 - 46
Latin Finance - September/October 2010 - 47
Latin Finance - September/October 2010 - 48
Latin Finance - September/October 2010 - 49
Latin Finance - September/October 2010 - 50
Latin Finance - September/October 2010 - 51
Latin Finance - September/October 2010 - 52
Latin Finance - September/October 2010 - 53
Latin Finance - September/October 2010 - 54
Latin Finance - September/October 2010 - 55
Latin Finance - September/October 2010 - Brazil Investor Report
Latin Finance - September/October 2010 - 57
Latin Finance - September/October 2010 - 58
Latin Finance - September/October 2010 - 59
Latin Finance - September/October 2010 - 60
Latin Finance - September/October 2010 - 61
Latin Finance - September/October 2010 - 62
Latin Finance - September/October 2010 - 63
Latin Finance - September/October 2010 - 64
Latin Finance - September/October 2010 - 65
Latin Finance - September/October 2010 - Inside Banco do Brasil
Latin Finance - September/October 2010 - 67
Latin Finance - September/October 2010 - 68
Latin Finance - September/October 2010 - 69
Latin Finance - September/October 2010 - 70
Latin Finance - September/October 2010 - 71
Latin Finance - September/October 2010 - 72
Latin Finance - September/October 2010 - 73
Latin Finance - September/October 2010 - 74
Latin Finance - September/October 2010 - 75
Latin Finance - September/October 2010 - 76
Latin Finance - September/October 2010 - 77
Latin Finance - September/October 2010 - 78
Latin Finance - September/October 2010 - 79
Latin Finance - September/October 2010 - 80
Latin Finance - September/October 2010 - 81
Latin Finance - September/October 2010 - Mexico Investor Report
Latin Finance - September/October 2010 - 83
Latin Finance - September/October 2010 - 84
Latin Finance - September/October 2010 - 85
Latin Finance - September/October 2010 - Temasek talks LatAm Strategy
Latin Finance - September/October 2010 - 87
Latin Finance - September/October 2010 - 88
Latin Finance - September/October 2010 - 89
Latin Finance - September/October 2010 - 90
Latin Finance - September/October 2010 - 91
Latin Finance - September/October 2010 - 92
Latin Finance - September/October 2010 - 93
Latin Finance - September/October 2010 - 94
Latin Finance - September/October 2010 - 95
Latin Finance - September/October 2010 - 96
Latin Finance - September/October 2010 - Cover3
Latin Finance - September/October 2010 - Cover4
https://www.nxtbook.com/nxtbooks/latinfinance/0319QMR
https://www.nxtbook.com/nxtbooks/latinfinance/1218JYM
https://www.nxtbook.com/nxtbooks/latinfinance/paraguay_2018
https://www.nxtbook.com/nxtbooks/latinfinance/8320YTM
https://www.nxtbook.com/nxtbooks/latinfinance/8465TBM
https://www.nxtbook.com/nxtbooks/latinfinance/1476YBW
https://www.nxtbook.com/nxtbooks/latinfinance/7835THM
https://www.nxtbook.com/nxtbooks/latinfinance/8655TGL
https://www.nxtbook.com/nxtbooks/latinfinance/0614IJP
https://www.nxtbook.com/nxtbooks/latinfinance/ecuador_20170910
https://www.nxtbook.com/nxtbooks/latinfinance/2713KNP
https://www.nxtbook.com/nxtbooks/latinfinance/4982CFT
https://www.nxtbook.com/nxtbooks/latinfinance/7803HWE
https://www.nxtbook.com/nxtbooks/latinfinance/3829THA
https://www.nxtbook.com/nxtbooks/latinfinance/7891MDD
https://www.nxtbook.com/nxtbooks/latinfinance/7714JCR
https://www.nxtbook.com/nxtbooks/latinfinance/5619CMK
https://www.nxtbook.com/nxtbooks/latinfinance/6939ASL
https://www.nxtbook.com/nxtbooks/latinfinance/1364ASF
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS_supp
https://www.nxtbook.com/nxtbooks/latinfinance/1304APV
https://www.nxtbook.com/nxtbooks/latinfinance/7234GSD
https://www.nxtbook.com/nxtbooks/latinfinance/1643XGS
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM
https://www.nxtbook.com/nxtbooks/latinfinance/8745TNV
https://www.nxtbook.com/nxtbooks/latinfinance/3629PBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_HSBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_supp
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC
https://www.nxtbook.com/nxtbooks/latinfinance/9463RVB
https://www.nxtbook.com/nxtbooks/latinfinance/7345GPY
https://www.nxtbook.com/nxtbooks/latinfinance/6398TVB
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM
https://www.nxtbook.com/nxtbooks/latinfinance/3885CWS
https://www.nxtbook.com/nxtbooks/latinfinance/45923GBC
https://www.nxtbook.com/nxtbooks/latinfinance/67449NBD
https://www.nxtbook.com/nxtbooks/latinfinance/46733NLP
https://www.nxtbook.com/nxtbooks/latinfinance/78456HCL
https://www.nxtbook.com/nxtbooks/latinfinance/89456RBM
https://www.nxtbook.com/nxtbooks/latinfinance/22278HBL
https://www.nxtbook.com/nxtbooks/latinfinance/2895YBM
https://www.nxtbook.com/nxtbooks/latinfinance/9033TBM
https://www.nxtbook.com/nxtbooks/latinfinance/8934TNP
https://www.nxtbook.com/nxtbooks/latinfinance/costarica20130304
https://www.nxtbook.com/nxtbooks/latinfinance/4672PNB
https://www.nxtbook.com/nxtbooks/latinfinance/9377BKL
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest2
https://www.nxtbook.com/nxtbooks/latinfinance/5532LMC
https://www.nxtbook.com/nxtbooks/latinfinance/9044TBM
https://www.nxtbook.com/nxtbooks/latinfinance/4877RBC
https://www.nxtbook.com/nxtbooks/latinfinance/3008JHV
https://www.nxtbook.com/nxtbooks/latinfinance/3728YBC
https://www.nxtbook.com/nxtbooks/latinfinance/9337KLM
https://www.nxtbook.com/nxtbooks/latinfinance/5674GNJ
https://www.nxtbook.com/nxtbooks/latinfinance/8330KMC
https://www.nxtbook.com/nxtbooks/latinfinance/7663HCM
https://www.nxtbook.com/nxtbooks/latinfinance/2319ZMB
https://www.nxtbook.com/nxtbooks/latinfinance/7110MKL
https://www.nxtbook.com/nxtbooks/latinfinance/8599FHG
https://www.nxtbook.com/nxtbooks/latinfinance/4517HJK
https://www.nxtbook.com/nxtbooks/latinfinance/7813GHB
https://www.nxtbook.com/nxtbooks/latinfinance/1564FBM
https://www.nxtbook.com/nxtbooks/latinfinance/8884HGV
https://www.nxtbook.com/nxtbooks/latinfinance/7863SVB
https://www.nxtbook.com/nxtbooks/latinfinance/5233SFB
https://www.nxtbook.com/nxtbooks/latinfinance/5899SML
https://www.nxtbook.com/nxtbooks/latinfinance/4311PMN
https://www.nxtbook.com/nxtbooks/latinfinance/1366FBB
https://www.nxtbook.com/nxtbooks/latinfinance/9355AXC
https://www.nxtbook.com/nxtbooks/latinfinance/8559EBN
https://www.nxtbook.com/nxtbooks/latinfinance/8244QXC
https://www.nxtbook.com/nxtbooks/latinfinance/1779BBN
https://www.nxtbook.com/nxtbooks/latinfinance/7144XVB
https://www.nxtbook.com/nxtbooks/latinfinance/8971QGH
https://www.nxtbook.com/nxtbooks/latinfinance/200805
https://www.nxtbook.com/nxtbooks/latinfinance/200804
https://www.nxtbook.com/nxtbooks/latinfinance/200803
https://www.nxtbookmedia.com