Foreign firms sink teeth into Brazil mobile market

SAO PAULO — Multi-billion-dollar deals by Spain's Telefonica and Portugal Telecom in Brazil's booming cellphone market this week underline the growth potential of Latin America's biggest economy, analysts say.They also point the way to perhaps further consolidation in a country where 185 million people out of a population of 193 million have mobile telephones.Wednesday's announcement that Telefonica was taking control of Brazil's biggest cell network operator Vivo by buying out Portugal Telecom's stake in the investment vehicle they shared for 9.7 billion dollars started the ball rolling.PT immediately announced it was using around half that bonanza to buy a 22 percent stake in Oi, the fourth-rated operator and the only one controlled by Brazilian interests.The moves gave Telefonica -- which also has a stake in third-ranked Tim, controlled by Telecom Italia -- boosted access to Brazil's flourishing market, PT a continued Brazilian revenue stream, and Oi badly needed capital to write down debt.The second-biggest network, Claro, is run by Mexico's America Movil."The big change sweeping through Brazil's telecommunications sector with Telefonica's aggressive offer has much to do with the future of seeing the Internet and television on cellular telephones," said Manfred Back, a business administration professor at University of Industrial Engineering."This fight between big companies is affecting the market, it's a battle not over selling mobile telephones but over selling Internet packets for telephones and, in the future, television. The market is huge."Underlining that point was the fact that there were just 65 million Internet users in Brazil -- a market that is set to explode when access is made easier through web-ready cellphone handsets.Brazil is keen to keep a piece of the action. President Luiz Inacio Lula da Silva said he would do his best to ensure Oi remained a Brazilian-controlled company despite PT's big stake."One thing I guarantee as long as I am president is that this company will continue to

Add comment

Nick
Content

Submit