AT&T LatAm to Invest US$500M in Keytech

FORT LAUDERDALE, FLORIDA (07/13/2000) - AT&T Corp. plans to pump US$500 million into its Argentina subsidiary during the next four years to beef up its network so that it can provide advanced telecommunications services to businesses.

The investment will allow the carrier to offer services such as high-speed transmission of large amounts of data, very fast and continuous Internet connections and local and long-distance telephone service, the company announced Thursday.

The Argentinian carrier, called Keytech LD, was bought by AT&T's Latin America subsidiary in February. In the coming years, Keytech plans to build a terrestrial fiber-optic network that will provide data transmission services in over 40 cities in Argentina, including Buenos Aires. AT&T Latin America also intends to equip Keytech with fixed wireless products to provide telephone service. [See "AT&T to Bolster Argentina Presence," Feb. 23.]AT&T founded AT&T Latin America in November of last year to attack the market for telecommunications services in Latin America, which is underserved. The company acquired a carrier in Brazil called Netstream in August 1999 and plans to merge this year with FirstCom Corp., which offers telecommunications services in Chile, Colombia and Perú.

When the FirstCom merger is completed, AT&T Latin America will compete against the dominant or incumbent carriers in Argentina, Brazil, Chile, Colombia and Perú. The company will also take on providers in those markets that, like itself, position themselves as alternatives to the dominant carriers. The alternative carriers that are aggressively investing to provide services throughout the region include Argentina-based Impsat Fiber Networks Inc., Washington, D.C.-based Diveo Broadband Networks Inc. and Comsat Corp.

Both incumbents and alternative carriers are scrambling to satisfy the increasing demand for all types of telecommunications services in Latin America. The demand built up during the decades when inefficient monopolies ruled the telecommunications markets of most countries. In the 1990s, many countries started to open up their telecom markets to competition, including Argentina, Brazil and Mexico, which are the three largest.

In November, Argentina will end the duopoly of Telefonica de Argentina and Telecom Argentina when the country allows other carriers to provide local and long-distance services. Telecom and Telefonica were formed when the country's state-owned telecom was split into two and privatized about 10 years ago. The government then gave Telecom a monopoly over half of Argentina and Telefonica a monopoly over the other 50 percent of the country.

Although both companies have invested considerably and improved services, much demand still remains unmet, especially from businesses interested in advanced telecommunications services like the ones AT&T Latin America plans to provide in Argentina, said Ignacio Perrone, an analyst with Pyramid Research Inc., based in Buenos Aires.

"There is still enough demand to sustain (alternative carriers) because the market is not totally mature," Perrone said. "There is still a lot of room for services penetration to grow."

The telecommunications services market in Argentina will be worth about $12 billion for this year as a whole, and is expected to grow robustly in the coming years, he said.

AT&T Latin America's $500 million investment in Keytech is expected to create some 2,000 jobs in Argentina. The company plans to invest $150 million by mid-2001 and $350 million between then and 2004.

AT&T, in Basking Ridge, New Jersey, can be reached at +1-908-221-2000 or at http://www.att.com/.

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More about AT&TAT&T Latin AmericaComsatDiveo Broadband NetworksFirstComImpsat Fiber NetworksKeytechPyramid ResearchTelecom ArgentinaTelefonicaTelephone Service

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