Global: BellSouth seals US$5.9bn deal with Telefónica

BellSouth has agreed to sell its Latin American wireless assets to Telefónica of Spain for about US$5.9bn in cash, in a move that will refocus the US telecommunications group almost entirely on its home market, says the Financial Times

BellSouth and Telefónica had been negotiating the deal, which people close to the talks said was signed over the weekend, for more than a year.

The transaction marries the Spanish group's ambitions to expand in one of its key markets with the US giant's wish to concentrate on its domestic market, which is undergoing a period of rapid change.

Last month Cingular Wireless--a joint venture of BellSouth and SBC Communications--agreed to pay US$41bn for rival group AT&T Wireless, in a bidding war with the UK's Vodafone that many observers believe will unleash more consolidation in America's telecoms industry.

Although BellSouth insists it did not need to sell its Latin American assets to fund its US$16bn share of the AT&T Wireless purchase, people close to the company have indicated that the inflow of cash from the sale would certainly "help".

The deal with Telefónica--which is set to gain 10.5m additional customers across ten countries in a region where it is already a strong player--had been sporadically discussed for more than a year.

Some observers are pointing to the transaction as an example of how European companies could be starting to take advantage of the recent sharp rise of the euro against the dollar.

According to people involved in the negotiations, the two sides were close to an agreement earlier this year, but BellSouth's involvement in the AT&T Wireless auction brought the dialogue to a temporary halt.

Negotiations had resumed in recent weeks, with two potential rival bidders--Mexico's America Móvil and Italy's Telecom Italia--also considering a move to acquire the BellSouth portfolio.

A spokesman for BellSouth declined to comment. Telefónica also declined to comment.

Source: Financial Times.