Telmex, Sprint Form Partnership to Bid for Long-Distance Concessions." (1995)

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1-11-1995 Telmex, Sprint Form Partnership to Bid for Long- Distance Concessions LADB Staff

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Recommended Citation LADB Staff. "Telmex, Sprint Form Partnership to Bid for Long-Distance Concessions." (1995). https://digitalrepository.unm.edu/ sourcemex/3374

This Article is brought to you for free and open access by the Latin America Digital Beat (LADB) at UNM Digital Repository. It has been accepted for inclusion in SourceMex by an authorized administrator of UNM Digital Repository. For more information, please contact [email protected]. LADB Article Id: 56321 ISSN: 1054-8890 Telmex, Sprint Form Partnership to Bid for Long-Distance Concessions by LADB Staff Category/Department: Mexico Published: 1995-01-11

In late December, Mexico's telephone monopoly Telefonos de Mexico (Telmex) announced an agreement in principle with the US telephone company Sprint to jointly offer long-distance telephone service in Mexico. The Telmex-Sprint partnership must still receive an operating concession from the Communications and Transportation Secretariat (Secretaria de Comunicaciones y Transporte, SCT), since Telmex's monopoly on long-distance service is due to expire at the end of 1996. The SCT is expected to announce long-distance concessions sometime in 1995. A number of US telephone companies have formed joint ventures with Mexican partners to seek concessions to long-distance service in Mexico beginning in January 1997. Those submitting applications include partnerships between AT&T and Monterrey-based Grupo Alfa; MCI and Grupo Banacci; and GTE Corporation, Grupo Visa, and Grupo Financiero Bancomer. The Sprint-Telmex alliance became possible after the collapse of a similar agreement between Sprint and Mexican cellular company Iusacell in late December.

According to financial analysts, the collapse of the Iusacell-Sprint agreement came as a surprise, since the Mexican company offered advanced technology and high-quality service and was a good match for Sprint. However, analyst Joshua Levenberg of US-based Pyramid Research told El Financiero International weekly business newspaper that the partnership may have collapsed because Sprint was unable to acquire a larger share of Iusacell, in which US-based Bell Atlantic already owns a 49% share. Meantime, the partnership with Sprint is expected to boost Telmex's efforts to protect its competitive position in the long-distance market after the new concessions become effective in 1997. In fact, Telmex had been widely expected to form a partnership with AT&T before the US company decided to form a joint venture with Alfa (see SourceMex, 11/23/94)

In addition to protecting its position in the Mexican market, the partnership with Sprint potentially provides Telmex with access to other global markets. Sprint has access to the European markets via its partners France Telecom and Germany's Deutsche Telekom. In addition, Telmex is expected to gain access to Sprint's operations in Brazil, Venezuela, and most of Central America. In a separate international business deal concluded in December, Telmex signed contracts to acquire public telephones from France, the US, and Japan. According to a Telmex announcement, about half of the telephones, 30,000 units, will be acquired from French-based Monetel and will be produced at the French company's subsidiary in Puebla. The remaining 30,000 units will be supplied equally by US- based Schlumberger and Japan's Anritsu.

Meanwhile, Telmex and Grupo Carso each announced the purchase of a 25% share of Red Uno, one of Mexico's largest telecommunications companies. Both Telmex and Carso are owned by powerful businessman Carlos Slim Helu. According to a Telmex announcement, the deal is beneficial to Red Uno because the company will gain access to new sources of capital and expand operations. At the same time, Carso and Telmex will obtain access to a new source of information systems and

©2011 The University of New Mexico, Latin American & Iberian Institute All rights reserved. Page 1 of 2 LADB Article Id: 56321 ISSN: 1054-8890 communications technology. (Sources: El Financiero International, 12/19/94, 01/02/95; La Jornada, 12/22/94; Agence France-Presse, 12/14/94, 12/26/94)

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