Three years after buying 5% of Mexican telephone operator Telefonos de Mexico SA de CV for some $350m, France Telecom today holds an investment worth $1,400m, according to La Tribune-Defosses. Alongside Southwestern Bell Corp and Mexican conglomerate Carso SA, which hold 5% and 10.4% respectively, France Telecom built up the telephone network to accomodate 7.3m subscribers compared with 5m three years ago. To reach the remotest areas of Mexico, the project often required sending equipment by donkey or human transport. The challenge is immense, since the existing network was no longer adapted, Christian Chauvin, France Telecom’s Telmex representative, is quoted saying. Things are improving slowly. The operator predicts that the number of subscribers should reach 13m by 2000, at which time 60% of Mexican households should have a phone. In the meantime, Telmex has managed to reduce the wait for phone connection from two years to three months, the article says, while increasing its prices by 50%. The tariff increases should only increase Telmex’s already substantial profitability, but most probably only for the short term, the paper reports, since the government has decided to open up interurban traffic to more competition in 1996. In its last fiscal year, Telmex reported sales of approximately $7,000m with net profit of some $2,500m. The profitability of Telmex has probably attained hit its peak, Chauvin says, while the article notes that Bell Atlantic has already taken a stake in a Mexican mobile telephone operator. In any case, France Telecom hopes to use its success in Mexico as a stepping stone to other South American markets, the paper says, quoting Charles Rozmaryn, France Telecom’s general director: The opportunities are numerous. We are examining all of them closely. The article characterises Argentina, where the French operator already manages part of the telephone network, as the most promising. Nicaragua, whose government has decided to privatise the phone company, is expected to prequalify France Telecom in the next few weeks, and Cuba, which is ready to sell 49% of its operator, is said to be in talks with the French giant.
