Tele Leste Celular Participacoes SA

Active

Prospective

Tele Leste Celular Participacoes SA was one of the 12 holding companies in which the assets of the state-owned Telebras were divided for their privatization. The remaining 11 holding companies were comprised of one long distance company (Embratel), seven wireless (A-band) companies, and three wireline companies. Before its restructuration, Telebras system was comprised of 27 state wireline companies, 26 state wireless (A-band) companies, and one long distance company (Embratel). In 1998, Tele Leste Celular Participacoes SA was created as a holding company to own the equity participation of Telebras in two cellular mobile operators in the Northeast of Brazil: Telebahia Celular SA (89.3 percent) and Telergipe Celular SA (73.6 percent). Through A-band (800s Mhz), Telebahia Celular provided cellular mobile telephone services to Bahia state and Telergipe Celular SA to Sergipe state. Like the other eleven companies created from Telebras, Tele Leste Celular Participacoes SA was fully privatized through an international competitive bidding in July 1998 when the Brazilian federal government sold its equity stake for US$ 369 million (R$428 million) to a consortium led by Iberdrola SA (62 percent) and Telefonica International Holdings (38 percent). Tele Leste Celular Participacoes was sold with a premium of 242.4 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. The concession area of Tele Leste Celular Participacoes comprised of area 9. The Brazilian cellular market was divided in 10 areas in 1996 in order to assign licenses for cellular phone services. In each area, A-band was assigned to the state owned companies that provided local fixed phone services in the area, while B-band was awarded to a private consortium through a competitive bidding. Tele Leste Celular Participacoes competed with Maxitel since 1997. In July, 1999, the consortium led by Iberdrola and Telefonica acquired 3.07% of Telebahia's total capital and 6.54% of Telergipe's total capital through a public offer. In 2001, Telefonica purchased all the Tele Leste Celular's capital stock directly and indirectly held by Iberdrola. By May 2002, all the shares of Tele Leste Celular held by Telefonica International SA had been transfered to Telefonica Moviles SA. In December 2002, the direct or indirect control of Tele Leste Celular held by Portugal Telecom and Telefonica Moviles (65.12%) was transfered to Brasilcel, a 50/50 joint venture of Portugal Telecom and Telefonica Moviles, created to manage all their mobile operations in Brazil. Since April 2003, Tele Leste Celular and all the operating companies participating in the joint venture have been operating under the brand name "Vivo". As of December 2005, the companies opearting under the brand "Vivo" were in the process of merging. Shareholder approval was still pending. On February 22, 2006, the respective shareholders’ meetings of Telesp Celular Participações SA (TCP), Tele Centro Oeste Celular Participações SA (TCO), Tele Sudeste Celular Participações SA (TSD), Tele Leste Celular Participações, SA (TBE) and Celular CRT Participações SA (CRTPart) approved (i) the merger of TCO in order to convert it into a wholly owned subsidiary of TCP and (ii) the merger of TSD, TBE and CRT Part into TCP. As of March 26, 2006, TCP was the sole surviving company of these mergers and subsequently changed its name to “VIVO Participacoes SA", project #1470. On February 22, 2006, the respective shareholders’ meetings of Telesp Celular Participações SA (TCP), Tele Centro Oeste Celular Participações SA (TCO), Tele Sudeste Celular Participações SA (TSD), Tele Leste Celular Participações, SA (TBE) and Celular CRT Participações SA (CRTPart) approved (i) the merger of TCO in order to convert it into a wholly owned subsidiary of TCP and (ii) the merger of TSD, TBE and CRT Part into TCP. As of March 26, 2006, TCP was the sole surviving company of these mergers and subsequently changed its name to “VIVO Participacoes SA". None

Information and communication technology (ICT)

Brazil

World Bank Group

Project

Broadband, Government, Telecommunications, Manufacturing (Industrial)