SBC Acquires Stake in Brazilian Wireless Provider

In yet another step toward its goal of becoming a global service provider, SBC Communications Inc. (Dallas, TX) has agreed to acquire a significant stake in Brazilian wireless provider Algar Telecom Leste (ATL) S.A., which serves customers in Brazil's Rio de Janeiro and Espirito Santo states. Telfonos de Mexico S.A. de C.V. (Telmex) will join SBC in the investment.

SBC and Telmex will acquire their combined stake from Algar Telecom, a private diversified Brazilian company. As part of the transaction, Williams Communications will reduce its stake to a 50% economic interest in ATL. SBC and Telmex will have the opportunity then to increase their investment to a 50% stake in ATL upon regulatory approval. Until then, Algar retains an investment in ATL, as well as voting and board control of ATL in accordance with Brazilian regulations.

The companies hope to complete the transaction by year-end, pending Brazilian regulatory approval. Financial terms of the agreement were not released.

The transaction gives SBC and Telmex access to Rio de Janeiro's dynamic wireless market whose annual growth rate is expected to exceed Brazil's national wireless growth rate. Although roughly 17 million people live and work in ATL's service area, only about 2 million have wireless service. This relatively low penetration presents a substantial growth opportunity.

ATL's wireless operations use the TDMA standard, the same technology SBC and Telmex use in most of their domestic wireless properties. TDMA also is the predominant wireless technology throughout Brazil, which gives ATL customers even good roaming options.

Edited by Ellen Jensen