Telecom Italia bought 30% of the portal Globo.com, which belongs to the Organizacoes Globo, one of the biggest Latin America telecommunication conglomerates, for US$ 810 million, and plans to create a Hispanic language portal and a news provider service via WAP.
This amount will be paid within 60 days, in cash. According to projections, Globo.com is worth US$ 2.7 billion.
Also, within 60 days two main projects created by a partnership joining Globo.com and Telecom Italia should be ready to operate. The first one will be a pan-regional operation focused on the Hispanic communities that may include other content and access partners. The second one will be to provide news through a wireless service using WAP technology, and that will be carried out by Italia Mobile.
The deal is critical for Telecom Italia’s strategy for the Brazilian market and is the first important step of the telecommunications operator outside the European market. According to Roberto Coloninno, president and CEO at Telecom Italia, the operator’s investment in Globo.com is the first one focused on an Internet operation in the international market.
Marluce Dias da Silva, general director at Rede Globo — main Organizacoes Globo’s TV network — mentioned four main reasons for the partner choice: identity, WAP technology knowledge, presence in Brazil and financial assets.
Luiz Carlos Boucinhas, executive director at Globo.com, informed that the portal reached 700 thousand unique visitors daily in its first month online. According to Boucinhas, all this traffic guarantees an investment of around US$ 70 million for this year.
“We’ve decided for the deal with Telecom Italia because not only their identity is very similar to ours but they also have leading technology in the wireless and WAP fields, which are products in which we are very much interested”, explains Marluce Dias da Silva. She pointed out, however, that other partnerships will be formed this year and says: “We will keep the control of the company”. Nevertheless Telecom Italia will occupy a place in Globo.com board.
The deal includes exclusivity for both, that is, Telecom Italia won’t be able to make deals with other Portuguese language horizontal portals and Globo’s portal won’t have partners in the telephony market. When asked about a possible deal with Bradesco — the biggest Brazilian private bank — Roberto Irineu Marinho, vice-president at Organizacoes Globo, admitted that there are ongoing conversations but there is nothing settled yet.
Together, the companies will start operations on the Web for the Portuguese and Spanish audiences in Latin America, including other access and content partners. Besides the project, the partners shall offer services focused on the WAP technology that will be provided by companies in which Telecom Italia have some participation — Maxitel, Tele Cellular Sul and Tele Nordeste Celular.
Today, these mobile phone operators together are responsible for around 3 million users in Brazil. “We saved financial resources from the Telecom Italia investments to finance Globo.com’s strategic projects for content distribution platforms over wide band, satellite and mobile,” said Roberto Irineu Marinho.
Those who have been waiting for the free access, that was already announced and postponed,
will have to wait some more. Globo.com explains that it’s signing deals with five PC providers
and also financing deals with banks, to guarantee cheaper computers and easy credit to help users
to buy them.
At the time the portal was released, the company said they were preparing their IPO for
this year. With the constant Nasdaq slumps and the new partners that will be added, there isn’t
a known date for the IPO.
This deal is the biggest Web business ever closed in Latin America. The operation between
Telecom Italia and Globo.com overcomes, by far, other very important business deals made in the region in the last months. Portugal Telecom paid US$ 365 millions for the Brazilian Internet and content provider Zip.Net, the portal Terra Networks paid US$ 202 millions for 96% of the ZAZ’s stocks, also one of the biggest ISP in the Brazilian market.
And there are more. The Spanish bank Santander bought 75% of the stocks of Patagon Web site paying for that US$ 570 millions. Universo Online (UOL), the biggest Brazilian ISP sold 12,2% of its capital for an investment group of Morgan Stanley bank.