Telefónica Móviles has completed the acquisition of 100% of BellSouth's mobile operations in Ecuador, Guatemala and Panama at a cost of US$1,665mn. The transactions mark the close of the first phase of an agreement reached in March, whereby Telefónica Móviles would acquire all BellSouth's cellular assets in Latin America. These comprised some 12.5mn customers in 10 countries at the end of the first half of 2004. Telefónica Móviles expects to acquire the rest of the operators during the course of 2004, completing a purchase currently valued at US$5,850mn and being financed with cash flow generated by Telefónica Móviles and debt.

Telefónica Móviles is expanding its Latin American footprint in anticipation of strong regional wireless growth. The Yankee Group has forecast a Latin American mobile market of 154mn by 2007. BellSouth is using the proceeds of the sale to fund the purchase of AT&T Wireless by part-owned Cingular.

What they got
Ecuador: Telefónica Móviles has become Ecuador's second mobile telephony operator, with a customer base of over 1mn at the end of the first half of 2004. The operator acquired has an estimated 36% share of a market of approximately 13.2mn inhabitants and an estimated penetration rate of 22%. The cost of acquiring all of the Ecuadorian company was US$833mn.

Guatemala: Adding together Telefónica Móviles Guatemala's existing operation and BellSouth Guatemala, Telefónica Móviles will have some 567,000 customers in that country at the end of the first semester of 2004 and an estimated 26% share of a market of approximately 11.5mn inhabitants, with an estimated penetration rate of 19%. Telefónica Móviles acquired 60% of the BellSouth operator from BellSouth itself, while Multiholding joined the agreement and will sell Telefónica Móviles the remaining 40%. The cost of acquiring all of the Guatemalan company is US$175mn.

Panama: Telefónica Móviles has acquired a company in Panama with more than 502,000 customers at the end of the first semester of 2004, with an estimated 50% share of a market of approximately 3.1mn inhabitants, and with an estimated penetration rate of 33%.

The numbers game
The three operators acquired had combined revenues of US$482mn and EBITDA of US$180mn in 2003. In all, BellSouth's 10 cellular operators in Latin America had revenues of US$2,501mn and EBITDA of US$867mn in that year.

Telefónica Móviles claims the transaction makes it the world's second largest multinational cellular company, with more than 68mn managed customers (figures for the end of the first half of 2004), and the biggest mobile operator in Latin America, with over 47.5mn managed customers. In addition, Telefónica Móviles reckons to be the only mobile telephony company operating in all the region's main markets, which together have over 421mn inhabitants.

There's little doubt about who the world's largest wireless operator is - the Vodafone Group with interests in 26 countries across five continents. Based on ownership interests at 30 June 2004, Vodafone, through its subsidiary undertakings, associated undertakings and investments, had approximately 139.2mn registered customers, excluding paging customers, calculated on a proportionate basis in accordance with its percentage interest in its ventures. T-Mobile and Deutsche Telekom might quibble with Telefónica Móviles' ranking of itself, though. The duo say that by Q2 of 2004, almost 103mn people were using the mobile communications services provided by companies in which T-Mobile or Deutsche Telekom have a majority or minority stake.
John Williamson