Brasil Telecom SA (merged with Telemar)

active

Brasil Telecom Participacoes, previously known as Tele Centro Sul Participacoes SA, was one of the three holding companies in which the 27 wireline companies of Telebras system were grouped for their privatization. The other two companies were Telesp Participacoes SA and Tele Norte Leste Participacoes SA. The rest of Telebras system was divided in one long distance company (Embratel) and eight wireless (A-band) companies. Before its restructuration, Telebras system comprised of 27 state wireline companies, 26 state wireless (A-band) companies, and one long distance company (Embratel). Tele Centro Sul Participacoes was created to own the equity participation of Telebras in nine wireline phone companies: Telecomunicacoes de Brasilia (81.4 percent), Telecomunicacoes de Goias (83.8 percent), Telecomunicacoes de Mato Grosso (91.9 percent), Telecomunicacoes de Rondonia (91.3 percent), Telecomunicacoes do Acre (94 perent), Telecomunicacoes do Mato Grosso do Sul (96 percent), Telecomunicacoes do Parana (67.3 percent), Telecomunicacoes de Santa Catarina (82.9 percent), and Companhia Telefonica Melhoramiento e Resistencia (78.6 percent). These nine wireline companies provide local and intra-regional long distance phone services in Brasilia, the states of Goias, Mato Grosso, Rondonia, Acre, Moto Grosso do Sul, Parana, Santa Catarina as well as the municipalities of Pelotas, Morro Redondo, Capao do Leao and Turucu in the state of Rio Grande do Sul. Tele Centro Sul Participacoes had a total population of 14 million in its concession area in 1998. Like the other eleven companies created from Telebras, Tele Centro Sul Participacoes SA was fully privatized through an international competitive bidding in July 1998 when the Brazilian federal government sold its equity stake for US$ 1,784 million (R$2,070 million) to a consortium led by Opportunity (19.9 percent), STET International, Telecom Italia, (19.9 percent), and pension funds. Tele Centro Sul Participacoes was sold with a premium of 6.2 percent over the minimum set by Brazilian government. The winning consortium paid 40 percent of its offering on August 3, 1998. The remaining 60 percent would be paid in two equal annual installments which would be adjusted according to the CPI plus a 12 percent annual interest. Tele Centro Sul Participacoes committed to increase the fixed line network of its nine wireline companies from 3.73 million installed lines in March 1998 to 4.7 million by December 1999, to 5.3 million by December 2000, and to 5.9 million by December 2001. In addition, the company committed to expand the pay-phones from 79,000 in March 1998 to 115,970 in December 1999, to 137,480 in December 2000, to 163,110 to December 2001. Anatel, the telecom regulatory agency, planned to award a license for a new company to mirror Tele Sul Participacoes' licenses in November 1998. However, only after four attempts, Anatel awarded through competitive bidding a fixed line telephony service license to the Center-South (Region II) to Global Village (August 1999). In 2000, Tele Centro Sul Participacoes merged all its wireline subsidiaries into one company, which was named Brasil Telecom SA. Also, it had its name changed to Brasil Telecom Participacoes, a holding company of Brasil Telecom SA. In 2000, Brasil Telecom SA also bought controlling interest in Companhia Riograndense de Telecommunicacoes (CRT) in Rio Grande do Sul from Telefonica International, thereby consolidating its presence in the southern area of Brazil. CRT was merged into Brasil Telecom SA and ceased to exist. CRT was the fixed phone company that provides local and long distance services in the State of Rio Grande do Sul. The company was one of the four Brazilian telecom companies that did not belong to the Telebras' system, which was privatized in July 1998. CRT was partially privatized in late 1996 when a 35% stake of the preferred stock was sold for US$ 656 million to a consortium led by Telefonica International Holdings and integrated by Telefonica de Argentina, CTC (Chile), and Citicorp. The 35% stake privatized represented 13.45% of the total stock but it transferred the management control to the winning consortium. In a second transaction, a stake representing 50.12% on its voting capital and an equity of 19.2% was sold through a competitive bidding process for $1.02 billion (R$1.18 billion) to a consortium led by Telefonica International of Spain. In October of 2002, TI reduced its stake in Brasil Telecom. TI cut its stake in the holding company that controls Brasil Telecom to 19% from 37% of the voting capital. Opportunity Asset Management paid US$ 47,000 for TI's share. In December 2002, Brasil Telecom acquired through a public bid a license to offer mobile services (SMP) in Region II for US$63.8 million (R$191.5 million). In 2003, Brasil Telecom created a wholly owned subsidiary, 14 Brasil Telecom Celular SA, to deliver the mobile services. To start mobile operations, however, Brasil Telecom needed approval from ANATEL, the regulatory agency, because TI, one of the shareholders, has other mobile operators. The subsidiary started operations in September 2004. As of December 2003, Brasil Telecom was controlled by Banco Opportunity with 20.9% of the total capital (62% of the voting capital). The other shareholders were TI with 31.6% (19% of the voting capital) and Techold with 47.5% (19% of the voting capital). In December 2007, Telecom Italia SPA (TI) completed the sale of its 38.5 % indirect stake in Brazilian telecom operator Brasil Telecom Participacoes SA (BRP) for $515 million to a fund controlled by Citigroup and other investors known as Techold Participacoes. In January 2009, Telemar, project 1483 acquired Brasil Telecom SA. The transaction took place through several share purchases begining in 2008 and was approved in December 2008 by Anatel. According to Brazilian GAAP the transactions were to be consolidated on Telemar's financial statements as of December 31, 2008. Sponsors: July 2006: "Brazilian telecoms service provider Brasil Telecom is in talks to buy Intelig Telecom, according to BNamericas." Timepart Participacoes and Techold Participacoes are groups of mutual or pension funds. 2001 100% 0 1455 10015 Number of connections (thousands) 2002 100% 0 676.3 10548 Number of connections (thousands) The investment figures here include the CRT invesments. CRT file was merged into the Brasil Telecom file and all the investments until 2000 are obtained by summing up the invesment of both companies. After 2000, the figures use only the consolidated statements of Brasil Telecom.