News

AT&T Sets $500M Latin Venture

11/07/1999 7:00 PM Eastern

New York -- AT&T Corp. last week jumped headfirst into
Latin America, announcing plans to create a new company that will focus on providing the
region with business-telecommunications services, a market it said is worth $16 billion
and growing by 20 percent a year.

The move comes after the company tested the waters in
August with a $300 million agreement to buy Netstream, a Brazilian company that provides
telecommunications services to businesses.

AT&T Latin America, as the new unit will be known, will
include the merged operations of Netstream, along with those of FirstCom Corp., a Florida
company that provides business-telecommunications services in Chile, Colombia and Peru.
AT&T and Promon Tecnologia S.A., Netstream's former owner, will contribute $70
million in cash to the venture.

The telco subsidiary expects to invest about $500 million
over the next five years, and will file to sell stock and possibly debt.

AT&T Latin America will provide high-speed voice and
data services, and is keen on Internet-protocol technology, said AT&T International
Ventures president John Haigh. It will also pitch global services to customers, such as
AT&T Global Networks and Concert, the worldwide telecommunications joint venture it
established with British Telecommunications plc.

AT&T's Liberty Media International Inc., which is
independently managed, owns stakes in cable systems in Argentina and Chile. However,
AT&T Latin America won't work with those systems, because of their residential
focus and Liberty's autonomy.

"Our global strategy requires us to target
businesses," AT&T president John Zeglis said. "In that regard, cable is not
within our global strategy."

Analysts said focusing on Latin American business customers
makes sense and should enable AT&T to leverage its other assets.

"It's a highly attractive business and
potentially very lucrative … if you consider that most multinationals probably deal
with AT&T already," said David Taff, a Latin America media and telecommunications
analyst for Santander Investment.

The deal follows major investments by AT&T in Canada
and Japan.

September