National Grid puts its Latin American interests on market
Internal links
National Grid has put its loss-making Latin American telecoms interests up for sale, warning of a "very challenging economic climate" in the region.
Plans to replicate the UK success of Energis by building national telecoms infrastructures from scratch in Brazil and Argentina have run into difficulties, the group said yesterday.
Brazil's Intelig, National Grid's 50 per cent-owned joint venture with Sprint and France Telecom, has failed to find the forecast amount of vendor financing from the telecoms equipment firms it is using to build the system. The UK company has invested more than £350m in Intelig, which is expected to post losses narrowing to less than £30m in the six months to September.
Meanwhile, demand for new services from Silica, its venture in Argentina, which has built a telecoms link across the Andes, has been stymied by that country's economic problems.
Analysts said that National Grid had made it clear it was examining ways of exiting its investments in Latin America, but the company insisted that it was keeping all options open.
Sources said that other possibilities include diluting the group's holding in Intelig and Silica by inviting in new partners or by establishing a programme of "progressive divestment".
The Brazilian venture has been dogged by problems since its launch in 1999, and was forced to change its business model when it became clear that margins were less than the cost of billing domestic customers for international calls. There was speculation yesterday that local telecoms firms in the country might be interested in bidding for Intelig, after further deregulation next year.
The new setbacks were revealed in a trading statement that otherwise assured investors the group's core UK and US electricity transmission businesses were performing in line with expectations.
But the failure to recoup capital expenditure costs in Brazil forced some analysts to increase their estimates for National Grid's interest charges this year. The shares fell 24p to 435p.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies