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Last Updated: Monday, 8 March, 2004, 09:51 GMT
Telefonica bets on Latin America
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Telefonica will be the largest operator in Latin America
Spanish telecommunications company Telefonica has agreed to buy the Latin American assets of US firm BellSouth for $5.85bn.

The deal makes Telefonica the leading mobile operator in the region.

"The deal brings cost synergies with an estimated present value of some $1bn," Antonio Viana-Baptista, chairman of Telefonica Moviles said.

Spanish firms are expanding in Latin America where growth this year is expected in some quarters to reach 4%.

Goodwill question

BellSouth operates in Argentina, Chile, Peru, Venezuela, Colombia, Ecuador, Uruguay, Guatemala, Nicaragua and Panama.

"The deal values 100% of the companies acquired (firm value) at $5.85bn and will be financed with cash generated by Telefonica Moviles and debt," Telefonica said.

Subsidiary of Telefonica, Telefonica Moviles will be in charge of the acquisition.

BellSouth said the deal would reduce its debt by $1.5bn, allowing it to refocus investments in its domestic market after securing a takeover of AT&T Wireless.

The companies have not announced when the agreement would be completed and how much goodwill it entailed.

Spanish financial daily Cinco Dias reports the purchase included $2.5 to $3bn in goodwill which being tax deductible under Spanish law could save Telefonica up to $1bn over 20 years.

Telefonica's subscriber base of 30 million in the region will be boosted by 10.5 million as a result of the purchase.

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