BellSouth's Brazilian Venture Secures $1.75 Billion Loan for Wireless Service

Strategic Insights -

BellSouth's ambitious venture in Brazil has taken a significant step forward with the securing of a $1.75 billion loan, setting the stage for the launch of wireless service to nearly 20 million people in Sao Paulo, one of the world's largest cities. The loan, arranged by J.P. Morgan and Merrill Lynch, is the largest issued in an emerging market since the Asian currency crisis began impacting funding for developing nations. This bold move signals faith in the resilience of Latin America's growing economies. BCP Telecommunications, a subsidiary of BellSouth and its Brazilian partners, has already paid 40% of the $2.45 billion bid for the Sao Paulo license, with the remaining amount to be covered by the loan.

Key Takeaways:

  • The loan agreement, valued at $1.75 billion, is the largest issued in an emerging market since the Asian currency crisis began impacting funding for developing nations.
  • BCP Telecommunications, a subsidiary of BellSouth and its Brazilian partners, bid $2.45 billion for the Sao Paulo license, committing the companies to offering service in the market.
  • The service based in Sao Paulo is expected to start offering wireless by early May, serving nearly 20 million people.
  • In the northeast of the country, where 26 million people reside, service will begin several months later.
  • The demand for wireless service has been higher than anticipated, with BCP holding a lottery for the first 150,000 customers from a pool of 1.6 million sign-ups.
  • The stakes are high, with BCP's bid being $1 billion more than the second-highest bidder.
  • The loan will be used to pay off the remaining 60% of the bid price for the Sao Paulo license.
  • BCP has two licenses, one for Sao Paulo and another for the northeast, and spends hundreds of millions of dollars to build the network required to offer wireless service.
  • BellSouth's largest partner in the Brazil venture is the Safra Group, a Brazil-based international financial group.

Statistics:

  • $1.75 billion: The value of the loan secured by BellSouth's Brazilian venture.
  • 20 million: The number of people to be served by wireless service in Sao Paulo.
  • 26 million: The number of people residing in the northeast of the country.
  • $2.45 billion: The bid price for the Sao Paulo license.
  • 40%: The percentage of the bid price already paid by BCP Telecommunications.
  • 150,000: The number of customers selected from the first 1.6 million sign-ups for the lottery.
  • 1.6 million: The number of people who signed up for the lottery.
  • $1 billion: The difference between BCP's bid and the second-highest bidder.
  • 163 million: The population of Brazil, making it the largest market in Latin America.

Sources:

  • "BellSouth's Brazilian venture gets $1.75 billion loan." [No date]