Brazil Thursday began selling off its controlling stake in the state-run telecommunications giant, Telebras, in what was billed as the largest privatization in Latin America.
The highlight of the bidding, expected to last several hours, was a showdown between American telecommunications giants MCI and Sprint for control of long distance carrier Embratel, one of 12 the companies that make up the Telebras holdings.Government regulations forced the two companies into live bidding after the sealed-envelope auction revealed only a 5 percent difference between their respective bids.
MCI first offered $2.13 billion, while Sprint came up with an offer of $2.15 billion.
After a tense 10-minute bidding showdown, MCI emerged the winner with an offer of $2.28 billion.
"MCI believes Embratel is the jewel in the Telebras telecommunications crown," said Jerry Di Martino, a company senior vice president. He said MCI planned to operate the long distance carrier alone but would consider future partnerships.
Outside the Rio de Janeiro Stock Exchanges, where the auction was being held, police used tear gas to disperse hundreds of demonstrators protesting the privatiza-tion.
The opponents, who claimed Telebras was being sold too cheaply, failed in their efforts to block the sale in the courts.
Brazil, which established a $11.7 billion minimum price for the entire Telebras system, raised $12 billion with the sale of the first four companies.
In other sales today, the Sao Paulo state fixed line service was bought by Spain's Telefonica SA for $4.98 billion - far higher than the minimum bid price of $3.03 billion. Two other fixed line companies, covering the rest of the country, were sold for a total of $4.7 billion.
"It is a fantastic start for the privatization," said Celso de Barros of the Salomon Brothers Investment Bank, which advised the government on the sale. "It is an historic moment for this country. I think people are going to get phones now."
There are 20 million people in Brazil waiting for phones lines they paid as much as $836 to be installed.