On Wednesday, August 21 the boards of Solpart and its subsidiary Brasil Telecom Participações (BTP) approved the start of negotiations on acquisition of Intelig and Globenet. The board of Brasil Telecom S.A., a local exchange carrier, is expected to ratify the decision when it meets Thursday, August 22. BrT won?t be able to acquire more than 19.9% because it hasn?t yet fulfilled the regulatory obligations applicable to incumbent LECs (mainly universal coverage and quality of service). Intelig, the competitive long-distance carrier, will be officially advised of the price offered later this week. It has given BrT until Friday, August 23, to do so. BrT has a war chest of some 700 million Brazilian Reals (currently about 233m US Dollars) and has said it doesn?t plan to finance acquisitions with bank debt.
Acquisition of Intelig and the Globenet submarine cable around the Americas had been discussed at earlier meetings of Solpart, controlled by Opportunity, pension funds and Telecom Italia. The idea was brought up by Opportunity and accepted by the funds provided it had Anatel?s approval. It then ran into opposition from Telecom Italia, which vetoed the proposal pending more information. According to a source close to BrT, Telecom Italia?s doubts were cleared up at the Wednesday board meeting. The Italians backed Opportunity?s proposal on technical grounds only, i.e. without riders relating to fulfillment of regulatory targets. Telecom Italia Mobile (TIM) can?t start operating its GSM service until BrT has met those targets. Alternatively, Telecom Italia must sell its holding in BrT.