COMMUNICATIONS: A New ‘Global Strategic Alliance’

By Tito Drago Reprint | | Print |

Tito Drago

MADRID, Apr 18 1997 (IPS) - Executives from top telecoms firms from Spain, Portugal, Great Britain and the United States announced the creation of “a global strategic alliance” at a press conference here Friday.

Juan Villalonga, president of Telefonica de Espana (TE), Ian Vallance of British Telecoms (BT), and Bert C. Roberts Jr. of the U.S. firm MCI told a press conference that their companies, along with Portugal Telecom (PT), would form an international consortium with exchange of shares, which plans to create new firms and partial alliances on every continent.

The accord follows previous commitments and is to be complemented with further agreements.

TE operates, on its own and in association with other firms, in Spain, Argentina, Brazil, Chile, Colombia, Peru, Portugal, Puerto Rico, Romania, the United States and Venezuela. BT is active in Great Britain, Austria, France, Germany, Gibraltar, Italy, Japan, the Netherlands, New Zealand, Portugal, Sweden and Switzerland.

MCI is installed in Canada and Mexico, as well as the United States, while PT operates in Portugal, Brazil, Cape Verde, Guinea- Bissau, Hungary, Kenya, Macao, Mozambique, Sao Tome and Spain.

The accord signed on Friday was based on a pact for the exchange of shares reached by TE and PT two days earlier in Lisbon. PT also signed another agreement with BT and MCI this week.

TE and MCI will create the company Telefonica Panamericana, to be under the Spanish firm’s control. Latin America will be the company’s main area of operations. The firms will invest in construction of telecoms infrastructure, and will participate in the development of operator networks.

The Latin American telecoms market is estimated to total 36 billion dollars, and according to studies by TE, will exceed 60 billion dollars by the turn-of-the-century.

TE and MCI will also have joint operations in North America, where the U.S. firm is the second largest long-distance server. As part of Friday’s accord, TE will invest in Avantel, a joint venture between MCI and Mexico’s Banamex.

TE will be MCI’s exclusive distributor in Spain, while TE, BT and MCI will participate in activities in Puerto Rico.

In the Americas, the new alliance will only face problems of competitiveness, as in Asia and Africa, on which they also have their sights set.

But in Europe, TE is part of the Unisource alliance, based on the U.S.- based transnational ATT (American Telegraph and Telecommunications). London’s Financial Times reported that spokespersons for Unisource have warned that the group would file a suit with the European Union (EU), to oppose Friday’s accord, on the grounds that it affects EU rules governing free competition.

Questioned at the press conference that followed the signing of the accord, TE’s Villalonga denied that Unisource or his company’s participation in that consortium would be affected.

But telecoms sources say it will be virtually impossible for TE to simultaneously form part of both alliances, which in the not so distant future will be disputing the European market.

The world’s ninth largest telecoms company, TE is the biggest provider of services in the Spanish-speaking world. Villalonga said the new accord would allow his firm “to become one of the top telecoms providers in the world, increase its capacity to offer quality global services, and continue its growth in Spanish- speaking markets.”