China’s Huawei may provide GSM technology to Brazilian mobile operator Vivo

28 June 2006

Sao Paulo, Brazil, 28 June – Chinese company Huawei may provide GSM technology to Brazilian mobile phone operator Vivo, which is part-owned by Portugal Telecom and Spain’s Telefónica, a contract valued at US$2 billion, according to press reports.

According to Brazilian financial daily, Gazeta Mercantil, Vivo, which is the largest mobile communications operator in Latin America, requested a quote last week from the main telecommunications network companies, and is also consulting Siemens, Nokia and Alcatel.

The contract will modernize Vivo’s network, which currently operates with CDMA technology, which has led to difficulties in developing the business, as all its main competitors already operate with GSM, which provides greater quality and reliability.

The contract is estimated to cost US$2 billion but, according to Gazeta Mercantil, could fall significantly at auction, to around half.

Portuguese financial daily, Jornal de Negócios, meanwhile reported that Telefónica planned to exchange its 10 percent stake in Portugal Telecom and its 32 percent stake in Morocco’s Medi Telecom for the 50 percent stake in Vivo held by the Portuguese operator.

For analysts at Portuguese bank BPI, the offer falls below the value of half of Vivo, which is valued at US$1.7 billion euros.

This is because Telefónica’s stake in PT is worth 1.1 billion euros at the current share price of the operator on the market, and the capital of the Moroccan company a further 245 million euros. (macauhub)