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March 23, 1988

ARGENTINIAN SUCCESS SHOOTS TELEFONICA INTO WORLDRANK OF TELECOM CONTRACTORS

By CBR Staff Writer

Following deregulation of telephone markets in the US and Britain, competition among companies such as British Telecom Plc, Cable and Wireless Plc, AT&T Co and Nippon Telegraph & Telephone Corp to break into new foreign markets has got stiffer. However it would appear that Compania Telefonica National de Espana SA, the publicly-quoted, minority-state-owned Spanish telephone company, has managed to steal a march on its more illustrious rivals. Under an agreement with the Argentinian government Telefonica is to lead an international consortium that will take a 40% stake in a new telecommunications company, replacing Entel, Argentina’s existing state-owned group (CI No 893). The project is expected to involve investments of between $500m and $700m, with Telefonica investing $100m in return for a 10% to 15% stake. The success follows on the Spanish company’s agreement with Atlanta-based Bell Atlantic Corp, in co-operation with IBM Spain, to introduce a software and integrated database system designed to improve its own telephone network (CI No 870). Following the contract, Telefonica and Bell Atlantic agreed to market jointly a software system to support telephone operations in other selected markets. The Spanish system is called GIC (integrated circuit management) and is to be installed throughout Spain over various stages by 1992. Among the new system’s network management functions is the control of operations design and network topography storage, as well as planning, engineering, installation and maintenance. At a cost of $13.3m over 15 months the first stage will be carried out in Madrid, Valencia and Palma de Mallorca. Other cities will follow depending on the success of the pilot system. Software for the system will be supplied by Bell Communications Research, the research and engineering consortium of the seven regional Bell Operating Companies. IBM Spain will be in charge of providing management and information systems assistance, and of installing a computer and peripheral equipment. Meanwhile Telefonica has been negotiating with other countries in Latin America and elsewhere to run their national networks. The company’s chairman, Sr Luis Solana, says that he expects to be able to announce another major agreement of this kind shortly, possibly in Europe.

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