NEW YORK-Americel S.A., a Brazilian cellular carrier that launched commercial service in December, was expected last week to place privately a $300 million debt issue to help fund its network deployment.
Brasilia-based Americel paid $297 million as the sole bidder for a 15-year renewable concession to operate the 25 MHz, B-band cellular license in Region 7. The region covers a population of 13.2 million and just more than a quarter of Brazil’s land area. Its territory includes the Federal District of Brasilia, where the area’s wealth is concentrated, in addition to the states of Goias, Mato Grosso du Sul, Rondonia, Tocantins and Acre.
Americel competes with a total of six analog cellular carriers, all subsidiaries of Telebras, that overlap different portions of its coverage area. One of them, Telebrasilia, plans to upgrade its network in the Federal District to a digital standard.
Americel issued commercial paper to pay in full for its B-band license. The new issue of eight-year senior notes is intended to refinance this outstanding short-term debt and to fund further deployment of the carrier’s network through 2000.
The company also has applied for a long-term loan at low interest rates from BNDES, a Brazilian development bank. Taken together with the new debt private placement, the funds will be sufficient to finance completion of the carrier’s network, Americel said. Americel also has identified alternative capital sources in case the BNDES loan application is denied.
Partly owned and jointly operated by Telesystem International Wireless Inc. and Bell Canada International, Americel’s all-digital Time Division Multiple Access network had gained more than 67,000 customers by the end of May.
Equity investors already have contributed more than $300 million to the start-up carrier. Besides TIW and BCI, they include major pension funds, the International Equity Investment Inc. subsidiary of Citibank N.A., Banco do Brasil and several other Brazilian financial institutions.
Moody’s Investors Service and Standard & Poor’s Corp. accorded the planned debt issue speculative grade ratings of B3 and B-, respectively.
Analysts for the two New York-based rating agencies praised Americel’s management, rapid commercial deployment, customer acquisition and equity investor participation.
They cautioned, however, that pent-up demand for telecommunications services in Americel’s territory must be weighed against the relative poverty of most residents.
Standard & Poor’s assigned a B corporate rating to Americel, and a B- rating to the company’s $300 million unsecured notes due 2006.
