Exploring New Worlds

"PT plans to maintain a leading position in the Brazilian cellular market by leveraging its strong position in Sao Paulo, and now Parana and Santa Catarina, offering innovative products, developing third generation services and exploring synergies with the other Portugal Telecom companies"

Portugal Telecom, the country´s largest listed company, is on a roll. Last year, its consolidated profit beat market forecasts to rise to $502 million, a nine percent increase over the previous year. And almost every week there is news of some fresh venture by PT at home or abroad.

"Our goal is to create value for the shareholder and that means growth," explains PT vice-chairman Miguel Horta e Costa. "The Portuguese market is now mature so we have to look overseas to grow and in those markets which are still young."

In Portugal, PT´s core business is providing fixed telephone services. But it is currently garnering more and more of its revenue from new telecom sectors such as mobile telephony, satellite and cable television and the Internet.

PT executives divide the company´s business into four areas: wireline, mobile, multimedia and international. The first category includes the traditional switched telephone service, both domestic and international. PT also leases lines to competing telecoms operators and transmits television and radio broadcasts.

"At the present, the wireline market acccounts for around 50 percent of our business," says the vice chairman, with the other half coming from the mobile, data and Internet services.

The company´s data and business solutions business is carried out by PT Prime, which is included in the wireline category and provides integrated voice, data and image, e-commerce and fixed-mobile convergence solutions. PT Prime has a broadband network, which supplies high quality and transmission capacity.

In mobile telephony, the company´s subsidiary TMN is a domestic market leader. This branch was merged with PT´s paging services subsidiary more than a year ago and since then, TMN also handles that sector.

PT Multimedia and its subsidiaries are involved in the company´s direct-to-home satellite and cable television broadcasting and programing through TV Cabo Portugal. The multimedia sector also includes PT Internet operations, offering access, portal activities and applications services for Portuguese and Brazilian clients.

Last, but certainly not least, are PT´s international operations and Brazil is the main overseas market where the Portuguese company is making major investments and shaking up the local sector.

In January, PT announced that its Brazilian mobile subsidiary Telesp Celular, which is the market leader in the state of Sao Paulo and was the largest cellular operator in South America, was acquiring local provider Global Telecom.

Executives noted that Global Telecom operates in the states of Parana and Santa Catarina which are relatively wealthy and where wireless telephony has a low penetration rate of less than 15 percent.

Once the deal is complete, Telesp Celular will have more than 4.7 million client subscribers in those Brazilian regions which have the most potential for mobile phone growth.

"PT plans to maintain a leading position in the Brazilian cellular market by leveraging its strong position in Sao Paulo, and now Parana and Santa Catarina, offering innovative products, developing third generation services and exploring synergies with the other Portugal Telecom companies operating in Brazil, namely Zip.net and BUS, the recently acquired data networks of Banco Bradesco and Unibanco, and TMN in Brazil," a company press release said.

Just over a week later, Portugal Telecom and Spain´s Telef—nica said they would join forces to create South America´s biggest-ever mobile phone operator in a $10 billion joint venture.

According to the two Iberian telecoms giants, the joint venture would combine their existing cellular phone assets in Brazil which have 9.3 million customers, cover 70 percent of the country´s GDP and serve a population of 94 million people.

Under the agreement, which still needs shareholder approval, the joint venture will be owned 50/50 by the two partners who are to have joint management and equal representation on the board. PT is to name the CEO and Telef—nica the new chairman.

"This will mark the most significant step in the consolidation of the Brazilian mobile industry," PT chairman Francisco Murteira Nabo said at the signing of the agreement. "The new joint venture will start life as soon as liberalization allows and will be the largest mobile company in Latin America from day one."

Brazil is not PT´s only foreign market and the company is active in a number of countries such as Angola, Cape Verde, Guinea-Bissau, Mozambique, Macau, Morocco, Botswana and Kenya.

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