BellSouth in talks to sell Latin America operations to Spains Telefonica

<p>BellSouth Corp. is in talks to sell its Latin American operations to Telefonica SA of Spain to raise its share of the $41 billion that Cingular Wireless has agreed to pay to acquire AT&T Wireless. The assets, mostly cell phone businesses, could fetch up to $6 billion for BellSouth.</p><p>The talks come despite BellSouths assertion as recently as September that Latin America would be a key ingredient to the companys efforts to overcome the steady loss of customers in its core local phone business in the United States to cell phones and new rivals.</p><p>Earlier this week, BellSouths partner in the Cingular joint venture also revealed it may sell some assets, though SBC Communications Inc. asserted that any such move would not be driven by a need to raise money for the all-cash purchase of AT&T Wireless.</p><p>Some industry analysts question BellSouths decision to sell off the Latin American assets in light of the companys success in that region.</p><p>You take this out and their growth profile shrinks, said Patrick Comack, analyst with Guzman and Co. in Miami. They dont need this money for Cingular. Now, if theyre looking to buy a long-distance company this year, yeah they would have to strengthen their balance sheet.</p><p>While media reports say BellSouth recently broke off talks to acquire AT&T Corp., the company has declined to comment on any future acquisitions.</p><p>Goldman Sachs analyst Frank Governali said the sale of the Latin America unit would be beneficial to BellSouth.</p><p>These are not strategic assets, he said in a research note Thursday.</p><p>BellSouth serves 10.5 million customers in Latin America after previously selling its Brazilian operations. Its holdings in Latin America are in Guatemala, Nicaragua, Panama, Venezuela, Colombia, Ecuador, Peru, Chile, Argentina and Uruguay.</p><p>In a brief statement Thursday, BellSouth said it was discussing the sale of all of its Latin American operations, but declined to identify the potential buyer or buyers.</p><p>However, in a separate statement Thursday in Madrid, Telefonica and its mobile phone unit, Telefonica Moviles, said they were in talks to buy the mobile phone assets of BellSouth in Latin America.</p><p>Telefonica, already the largest telecommunications operator in Spain and South America, said no price or agreement has been reached.</p><p>But a source with knowledge of the situation said the talks were in an advanced stage and a deal could come soon. The source, speaking on condition of anonymity, said BellSouths assets in 10 Latin American countries are valued at up to $6 billion.</p><p>Proceeds from any such sale would help fund BellSouths $16 billion share of last months deal to acquire AT&T Wireless.</p><p>However, the source said, that wouldnt be Bellsouths only reason for selling the assets. The person said BellSouth has received overtures for a year from companies wanting to buy its Latin America operations.</p><p>BellSouth owns 40 percent of Cingular. SBC Communications of San Antonio, which owns the other 60 percent, said in a statement this week that it has sufficient resources to pay for its share of the Cingular deal and any possible sale of its assets in rural areas is unrelated.</p><p>The numerous companies and private capital groups interested in acquiring rural access lines believe that they may be more valuable to them than to SBC, the statement said. Although we have not arrived at any conclusion on that point of view, we have a fiduciary responsibility to explore all options and determine if a sale is in our owners best interests.</p><p>BellSouths strong presence in Latin America has bucked a trend in the last few years that has seen other major U.S. telecom companies reduce their exposure amid economic and political turmoil in the region.</p><p>In September, chief executive Duane Ackerman told The Associated Press that BellSouth believed Latin America was important to its future.</p><p>They are generating their own cash, he said at the time. They are growing. We are not really committing new money to that region, but were managing what weve got, and its on the positive side of the equation.</p><p>Then came auction for AT&T Wireless, an opportunity Cingular and its parent companies felt they couldnt turn down. If the deal goes through, Cingular would become the nations largest mobile phone carrier with 46 million customers.</p><p>In Thursdays trading on the New York Stock Exchange, BellSouth shares rose 47 cents to $29.07.</p>

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