Telefonica, IDT in Backbone Deal

Latin American telecom investor Telefonica Internacional (TISA) and U.S.
telecom operator IDT Corp. Thursday formed a joint venture. IDT will also take a stake in Telefonica’s submarine cable project.

IDT will take a 10 percent stake in Telefonica’s $1.5 billion SAm-I Latin American submarine cable project, which plans to create a backbone to support high capacity connectivity for voice and Internet traffic. Terms of the deal were not disclosed.

The self-healing fiber optic ring will connect Brazil, Argentina, Chile,
Peru, Colombia, Central America, the Caribbean, and the U.S. The system
capacity will reach speeds of 1.28 terabits per second and is expected to begin a phased rollout next year.

IDT will also buy at least $100 million in cable capacity to strengthen its newly-formed fiber optic subsidiary and meet an expected surge in bandwidth demand between the U.S. and Latin America.

The joint venture, managed by Telefonica, will offer telecom and Internet services targeting the Hispanic market in the U.S. and unnamed markets in Latin America.

Telefonica held the monopoly for telecom services in Spain and is now a
major player in both the European and Latin American markets with a
customer base of more than 55 million customers.

Earlier this year, the company launched low-cost Net access service Nuestra Voz, which also targets the
Hispanic market in the U.S., which is estimated to be a base of 30 million users.

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