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Report: BellSouth selling Brazil unit

By
BRADLEY BROOKS, UPI Business Correspondent

RIO DE JANEIRO, Feb. 11 (UPI) -- America Movil -- Latin America's biggest cellular phone company -- is close to buying a Brazilian wireless unit of BellSouth Corp. for $190 million, local business newspaper Valor reported Tuesday.

Valor, citing unidentified sources, reports that Telecom Americas -- the Mexico-based America Movil's Brazilian unit with 5.18 million users -- is trying to buy control of BSE, a wireless provider controlled by BellSouth and Brazil's Safra Group.

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Representatives from all parties are in New York this week trying to reach a deal, which could come by Friday, Valor said.

"The price could be considered reasonable," Roger Oey, a telecom analyst with BBV in Sao Paulo, told United Press International.

"But there's been no mention of debt. If America Movil has to take on some debt, then it would be an expensive acquisition."

BSE has more than $500 million in debt, but it also has a client base of 1 million and a presence in six northeastern Brazilian states, which would be savvy buy for America Movil.

"It's an important strategic move," Oey said. "America Movil would increase its footprint and establish itself as the second biggest company in the market, because right now they are head-to-head with Telecom Italia."

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Analysts say that BellSouth's debt-ridden BCP unit, which operates in the metropolis of Sao Paulo, might also come into the crosshairs of America Movil's moves to grow in Brazil.

Last year, BCP defaulted on more than $400 million in loans. The company has some $2 billion in debt.

BCP has been negotiating with creditors for months and is reportedly nearing a deal that would essentially leave creditor banks in control of the company, as they would accept a debt-for-equity swap.

In a conference call with reporters in late January, America Movil's Chief Executive Daniel Hajj said the company was likely to go after BCP.

"If it's something that has synergy, we're going to do it," Hajj said at the time.

In addition to America Movil, local mobile provider Oi, a unit of fixed-line phone giant Telemar, is reportedly interested in BCP.

Analysts say that America Movil's moves are the latest and possibly last in a Brazilian cellular sector that has been undergoing aggressive consolidation.

The most recent spark was the $1 billion purchase of the mobile operator TCO by a joint venture of Spain's Telefonica and Portugal Telecom in Brazil. These hold more than 50 percent of the country's mobile market.

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It was in October that Telefonica and PT combined their cellular businesses in Brazil to become the country's No. 1 wireless operator.

"If the other groups want to maintain their competitiveness, they will have to take the initiatives to enlarge their market share," JP Morgan said of Telefonica and PT's competitors in a recent report.

Oey said that future movement in the sector would likely see companies putting their own houses in order.

"Now we're talking about consolidation of existing assets -- they won't be acquiring other companies," he said. "I guess this is the final chapter of the acquisition movement."

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