Telemar to invest US$900mn in 2005

Brazilian teleco Telemar intends to invest 2.5bn reais (US$900mn) in 2005, up 25% on the 2bn reais invested in 2004, local daily Valor Economico quoted Telemar president Ronaldo Iabrudi as saying. The investment will primarily cover expansion of the company's mobile telephony and broadband services and also go towards achieving universal access goals. The company will continue to consider acquisitions but the above figure does not include funding for such purposes. Telemar will use company resources to finance this investment plan. The company has roughly 4.9bn reais in cash flow and is concluding a debt reduction program. Data published in September placed the company's net debt at 7bn reais. "Next year, the value of cash flow will be very similar to the size of debt," said Iabrudi. Telemar provides fixed line telephony in 16 states in the southeast and northeast. The company aims to expand and transform its mobile arm Oi into a leading company in the areas where Telemar has operations. Oi is today the second largest operator in the region, trailing mobile operator Vivo, which is controlled by Portugal Telecom and Telefónica Móviles. Telemar also aims to expand internet services by increasing its broadband subscriber base to 750,000 from 480,000, according to Iabrudi. The group plans to launch an ISP unit at the beginning of 2005 following the strategy adopted by other operators. The unit will initially offer internet access free of charge. Telemar recently sold its ownership of internet access provider iG to Brasil Telecom. Telemar is betting on mobile and broadband service since they are the two segments that are growing fastest in the telecom sector and can help compensate for stagnation in local telephony. The operator will also spend 400mn reais to comply with the universal access goals set by Brazilian telecom regulator Anatel. Fixed line concessionaries are currently required to offer individual telephone lines in all locations with less than 600 inhabitants, but Anatel plans to have them sign new contracts with a minimum service requirement in locations with less than 300 inhabitants. Telemar's main equipment supplier is Germany's Siemens.