Born to be Wireless

Vivo Participacoes SA, Brazil's largest mobile-phone company, will fill a strategic gap in its coverage of South America's biggest country with the purchase of Telemig Celular SA and Tele Norte Celular Participacoes SA.

Vivo said yesterday it agreed to buy controlling stakes in wireless operators Telemig and Tele Norte for 1.2 billion reais ($640 million). Vivo agreed to buy 22.7 percent of Telemig's stock and 19.3 percent of Tele Norte.

The purchase gives Vivo a stronger presence in Minas Gerais, the country's second-richest state, and the northern states of Amapa, Roraima, Amazonas, Para and Maranhao. Telemig has 3.54 million clients in Minas Gerais, and Tele Norte has 1.29 million clients in the Amazon region.

Vivo's lead over rivals Telecom Italia SpA and America Movil SA has shrunk in the past year. Sao Paulo-based Vivo is jointly controlled by Portugal Telecom SGPS SA and Madrid-based Telefonica SA, which have discussed a possible end to their joint venture since Telefonica backed a failed hostile bid for Portugal Telecom this year.

33 Percent Share

Buying Telemig and Tele Norte will add 4.8 million subscribers, bringing the company's total to 35 million, or 33 percent of the national mobile-phone market, Vivo said. Telemig has a market share of 30.4 percent in Minas Gerais, while Tele Norte has a 22 percent market share in the Amazon region.

Vivo, which is controlled by Portugal Telecom SGPS SA and Madrid-based Telefonica SA, will make follow-up offers to buy the rest of Telemig and Tele Norte, and will pay 2.9 billion reais if those offers are fully accepted.

Telefonica shares rose 11 cents, or 0.6 percent, to 17.62 euros at 10:49 a.m. in Madrid. Portugal Telecom shares fell 3 cents, or 0.3 percent, to 10.15 euros.

Tele Norte common shares surged 37 percent to 1.95 reais yesterday before the announcement. Telemig rose 3.2 percent to 11.4 reais.

Labels: acquisition, Vivo