Mexico Telmex Executive: Co Studying Bid On Endesa's Smartcom

SANTIAGO -(Dow Jones)- Mexican fixed-line telecommunications giant Telefonos de Mexico (TMX) is studying the possibility of making a bid on Smartcom, the Chilean mobile services unit of Spanish utility Endesa SA (ELE).

"We're studying the possibility, but we still haven't presented an offer," Telmex director Oscar Von Hauser told reporters at a business conference in the Chilean capital city Friday.

He noted that he won't meet with executives from Smartcom or Endesa this trip. "I only came for this conference and I leave in the afternoon," he added.

Endesa has hired investment bank JP Morgan to advise on the sale of Smartcom.

Chile's mobile telecoms market has experienced major concentration in the past 12 months.

Last year, Spanish telecom Telefonica's (TEF) mobile arm bought Bell South Corp.'s (BLS) South American mobile telephony operations for $5.85 billion and merged them with its own assets.

In Chile, Telefonica bought out minority shareholders in its existing unit with $1.32 billion.

The merged company leapfrogged Empresa Nacional de Telecomunicaciones SA's (ENTEL.SN) mobile unit Entel PCS to become the number one in the local market.

Entel itself also changed hands, with a local consortium buying Telecom Italia SpA's (TI) 54.8% share for $934 million. Entel is the sole company in the local stock market that includes mobile assets.

Endesa Chief Executive Rafael Miranda told a group of investors in Madrid a few days ago that Smartcom was worth $861 million.

Endesa paid $300 million to take full control of the company in mid-2000.

Speculation that the company - the smallest of the three remaining mobile operators in the South American country - was on the block has circulated in the market for years, and Endesa itself has said it was looking to sell non-core non-utility assets.

The number of cell phones in Chile reached 9.9 million in first quarter of 2005.

Smartcom ended 2004 with 1.539 million customers, up 32% from the end of 2003.

It also posted a 54.7% jump in earnings before interest, tax, depreciation and amortization, to EUR43.8 million from EUR28.3 million the year before.

Among other possible buyers is Mexican wireless giant America Moviles SA (AMX), which has expanded aggressively in the region.

Telefonica Movil (TEM) and Entel PCS operate on the GSM standard, while Smartcom uses the CDMA standard.

Newspaper Web site: http://www.diariofinanciero.cl

-By Patricia San Juan, Dow Jones Newswires; +56-2-460-8546; patty.sanjuan@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 1st July 2005