Telemig Celular Participacoes SA

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Telemig 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). Telemig Celular Participacoes SA was created as a holding company to own the equity participation of Telebras in Telemig Celular SA (82.9 percent) in 1998. Telemig Celular SA provided cellular mobile telephone services to the state of Minas Gerais through A-band (800s Mhz). Like the other eleven companies created from Telebras, Telemig Celular Participacoes SA was fully privatized through an international competitive bidding in July 1998 when the Brazilian federal government sold its equity participation for US$ 650 million (R$756 million) to a consortium Telpart Participacoes, led by Telesystem International Wireless (TIW) and Opportunity. Telemig Celular Participacoes SA was sold with a premium of 228.7 percent over the minimum set by Brazilian government. The winning consortium paid 40 percent of its offering on August 3, 1998. The remaining 60 percent would be paid in two equal annual installments which would be adjusted according to the CPI plus a 12 percent annual interest. The concession area of Telemig Celular SA comprised of area 4 of the cellular market. The Brazilian cellular market was divided in 10 areas in 1996 in order to assign licenses for cellular phone services. In each area, an A-band license was assigned to the state owned companies that provided local fixed phone services in the area, while B-band licenses were awarded to a private consortium through a competitive bidding. Telemig Celular SA competed with Vicunha Telecomunicacoes in most of its concession area and with CTBC Telecom in the rest since 1998. In March 2003, TIW sold its shares to its local partners for US$ 70 million (TIW held a 49% stake in the consortium Telpart). After the transaction, Opportunity became the controller and the other shareholders are pension funds such as Previ (the pension fund of Banco do Brasil), Petros (pension fund of Petrobras), Telos (pension fund of Embratel), Sistel and Funcef. Vivo, project 1470, acquired Telemig in the April of 2008. Telpart Participacoes is a mutual/pension fund led by Opportunity