BELL CANADA INTERNATIONAL, TELMEX AND SBC FINALIZE SOUTH AMERICAN AGREEMENT

  • SBC joins partnership with 11.4% stake;
  • Telmex to assign its 44.3% interest to newly-formed América Móvil;
  • Partners agree to carve out BCI’s sale of its stake in Brazilian competitive local exchange carriers;
  • Partners agree to acquire Telmex’s interest in Argentine broadband company.

MONTREAL, MEXICO CITY and SAN ANTONIO, September 26th, 2000 – Bell Canada International Inc. (“BCI”) [NASDAQ: BCICF] [TSE: BI], Teléfonos de México S.A. de C.V. (“Telmex”) [NYSE: TMX] and Texas-based SBC Communications Inc. (“SBC”) [NYSE: SBC] today announced revisions to the June 7th agreement between Telmex and BCI governing the formation of a new, facilities-based communications company. which will now serve as the three companies’ principal vehicle for expansion in Latin America.

The agreement, expected to close in the fourth quarter, reflects developments which have occurred since June, when BCI and Telmex announced the initial formation of this new enterprise.

SBC TO HOLD 11.4% STAKE IN NEW COMPANY

BCI and Telmex reported in June that they had invited SBC to take a minority interest in the new company. The revised agreement confirms that SBC’s wholly-owned subsidiary, SBC International, is taking an 11.4% stake in the new company by contributing its assets in the region. As a result of SBC’s participation, the new enterprise’s initial capitalization will increase to approximately US$4 billion, with Telmex and BCI each holding a 44.3% interest.

AMÉRICA MÓVIL TO ASSUME TELMEX’S STAKE

Recently, Telmex announced that it will spin-off its Mexican cellular company, Telcel, as well as most of its international investments, including its interest in the venture, by creating América Móvil S.A. de C.V. (“América Móvil’).

PARTNERS AGREE TO CARVE OUT BRAZILIAN CLECs

The June agreement contemplated BCI contributing its interests in the Brazilian competitive local exchange carriers (CLECs), Vésper S.A. and Vésper Sao Paulo S.A. and the Internet Service Provider, Interativa S.A. ( collectively, “the Vésper companies”) to the new venture.

Subsequent to the June announcement, BCI’s partner in the Vésper companies, VeloCom Inc. of the United States, offered to purchase BCI’s stake. BCI has now signed a definitive agreement to sell its interests in the Vésper companies for gross proceeds of US$875 million, consisting of US$600 million in cash and US$275 million in promissory notes. Closing of the Vésper sale is expected to conclude in the first quarter of 2001, subject to the parties obtaining regulatory and other consents, and Velocom concluding necessary financing. Through this sale, BCI expects to realize an approximate CDN$1 billion (US$675M) pre-tax gain on its original investment.

The parties have agreed that the Vésper sale proceeds, net of any additional BCI capital put into the Vésper companies prior to closing, will be contributed to the new company in lieu of BCI’s interests in the Vésper companies.

VENTURE TO ENTER ARGENTINE BROADBAND MARKET

The partners have agreed the new company will acquire Telmex’s interest in the Argentine broadband company, Techtel. The addition of Techtel will give the new company a presence in the four largest economies of South America and confirms its determination to be a leader in the emerging market for broadband wireless applications.

ABOUT THE NEW COMPANY

The new company will hold interests in: Brazilian and Colombian cellular operations serving over 2.5 million total subscribers in licensed territories with a population of 73 million; broadband wireless companies in Venezuela and Argentina  markets with a combined population of approximately 60 million; and a Brazilian telephony and broadband cable operation providing pay television and high speed Internet access to over 165,000 subscribers in licensed cities containing 1.9 million households, primarily in the Greater Sao Paulo area.

In announcing the revised agreement, the CEO of Telmex, Mr. Jaime Chico Pardo stated, “We welcome the formal entry of SBC to our partnership. We see this enterprise with BCI and SBC as a key source of growth for América Móvil, which will launch as the largest cellular provider in Latin America. The addition of Techtel to the new company demonstrates the partners’ conviction to deploy such broadband infrastructure to support the spectacular growth of data in Latin America."

Louis Tanguay, President and CEO of BCI, added, ”The capital from the Vésper divestment, which represents more than a four-fold increase in value in just eighteen months, will enhance the new company’s ability to secure new broadband growth opportunities. We feel strongly that Brazil, in particular, represents a highly attractive market for such broadband growth. We look forward to expanding our Brazilian mobile wireless presence; and to securing additional LMDS broadband wireless opportunities which complement our Argentine and Venezuelan initiatives. BCI is pleased to have played a key role in creating the Véspers, and in having executed the world’s fastest and largest roll-out of a fixed wireless telephone network. We are committed to providing the support needed to ensure a smooth transition."

“SBC is pleased to join in this venture,” said Drew Roy, President, SBC International operations. “With our collective experience in broadband, wireless and Internet solutions, we will be in an excellent position to capitalize on the exploding growth in four of South America’s top communications markets.”

About BCI

Bell Canada International owns, develops and operates advanced communications companies in markets outside Canada, with a focus on South America. A subsidiary of BCE Inc., Canada’s largest communications company, BCI’s shares are listed on the Toronto Stock Exchange under the symbol BI and on the NASDAQ National Market under the symbol BCICF. Visit the Web site at

About TELMEX and América Móvil

Telmex is the leading telecommunications company in Mexico with more than 11.5 million telephone lines in service, offering telecommunications services through a 50,000 kilometer fibre optic digital network. TELMEX and its subsidiaries offer a wide range of advanced telecommunications, data and video services, Internet access as well as integrated telecom solutions for corporate customers.

América Móvil will be Latin America’s largest cellular communications provider, with more than 9.9 million cellular subscribers and telecommunications investments in several countries in the region.

About SBC

SBC International is a wholly-owned subsidiary of SBC Communications Inc. Ranked among the largest Fortune 500 companies, SBC is a global communications leader providing comprehensive telecommunications products and services through a global network of leading brands and operations in the U.S. and 21 other countries around the world. Learn more about SBC at

This press release contains forward-looking statements regarding consummation of the America Movil spin-off and of Telmex’s resullts. Actual results could differ materially from these forward looking statement. This information, as well as future reports made by Telmex or any of its representatives, verbal or written, could differ materially from the real results. These forward-looking statements which were made on a specific date, should not be considered as statements of fact. Telmex undertakes no obligations to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise.