Telefonica de Espana SA may have a new president, but its expansion strategy remains the same. The new president of Telefonica Juan Villalonga recently travelled to Lisbon accompanied by predecessor Candido Velazquez to renew contacts with Portugal Telecom SA, with a view to reaching a collaborative agreement with the Portuguese carrier. The agreement, which Villalonga said was all but signed, will give Telefonica a clear foot in the door to the Brazilian market, the world’s largest Portuguese-speaking country. Telefonica has declared its intention to continue on its course of expansion throughout Latin and Central America, and joint action with Portugal Telecom, now in the process of privatisation, is seen to be of fundamental importance. Villalonga told El Pais: The project we are looking at together would not be a Spanish project, but a European, Iberian project, in which Telefonica and Portugal Telecom would be equals.
World Fair
Telefonica’s interest in the Portuguese market is not a recent affair; in the past the two carriers exchanged minority stakes in the radio-paging firms Mensatel SA and TLM SA, while Telefonica de Sistemas SA has already set up a unit in Portugal and eagerly awaits the potential business opportunities of the Lisbon ’98 World Fair after the experience gained in Seville in 1992. But it is Latin America that will be the principal backdrop to Telefonica’s romance with Portugal Telecom. In Brazil the Portuguese carrier has an important agreement with the state holding company Embratel to link the networks of Portugal and Brazil, and is also well-placed with respect to the imminent privatisation of telecommunications firms there. Portugal Telecom also sees rich pickings to be found in the South American continent and president Luis Manuel Pego declared over a year ago: Portugal Telecom intends to be present in Latin America together with Telefonica, whether the Spanish company is a partner or a competitor. The Portuguese carrier is one of eight state-owned giants the government currently plans to sell, and Telefonica could end up with a stake in the company, since it would appear to be a likely option that a significant stake in Portugal Telecom will land with to a strategic ally.
