MADRID, Spain and MEXICO CITY, Sept. 11 /PRNewswire-FirstCall/ -- Telefonica Moviles (NYSE: TEM; Madrid TEM) and Grupo Pegaso have completed the integration of the operators of Telefonica Moviles Mexico, the Mexican subsidiary of Telefonica Moviles, with Pegaso PCS, the Mexican mobile telephony operator. The combination of Telefonica Moviles Mexico and Pegaso PCS gives rise to a new joint entity, in which Telefonica Moviles controls 92% of the capital stock and Grupo Pegaso the remaining 8%. With the necessary approvals for the transaction having been obtained from the Mexican authorities, Telefonica Moviles and Grupo Pegaso have finalized the agreement announced last May, by which Telefonica Moviles acquired 65% of the capital of Pegaso PCS from Sprint Corporation, Leap Wireless and other non-Mexican financial investors for $87 million in cash. The total value of Pegaso PCS has been set at $1.360 billion. Subsequently, and in line with the agreement announced in May, both parties have carried out a capital increase in Pegaso PCS, to amortize short-term debt and increase the company's financial strength. This capital increase has a value of $319 million, of which Telefonica Moviles has subscribed 65% and Grupo Pegaso, the remaining 35%. Following the capital increase, at the end of 2002 Pegaso PCS' external debt level will be reduced to $615 million. The operation has been carried out much earlier than was initially envisaged, since both groups had set the last quarter of this year as the period for completing all the processes required to create the new company. With this operation, Telefonica Moviles becomes Mexico's number two mobile telephony operator, with more than two million active managed customers, using the conservative client-counting criteria applied by Telefonica Moviles. The integration of Pegaso PCS enables Telefonica Moviles to extend its presence to the whole of Mexico, which has a market of over 100 million inhabitants, and to gain immediate access to Mexico City, the country's most attractive market with a population of around 20 million. It also strengthens Telefonica Moviles' mid-term growth and leadership in the Spanish- and Portuguese-speaking mobile telephony market. During 2001 Telefonica Moviles acquired four mobile telephony operators in the north of the country (Bajacel, Movitel, Norcel and Cedetel), which together had more than 1.2 million active clients at the end of 2001. The combined company will have a distribution network comprising over 3,500 points of sale located in the main Mexican cities, and will be able to achieve important economies of scale and synergies in such aspects as handset management, systems and network development, and services. About Telefonica S.A. Telefonica is the leading telecommunications operator in the Spanish- and Portuguese-speaking world and the second-largest European operator in terms of stock market capitalization. In addition, it ranks fourth in the world ranking of value creation between 1996 and 2000, when it had an average annual increase in profitability of 43%. Its shares trade on the continuous market of the Spanish stock exchanges (Madrid, Barcelona, Bilbao and Valencia) and on stock exchanges in London, Paris, Frankfurt, Tokyo, New York, Lima, Buenos Aires, and Sao Paulo, as well as on the London Stock Exchange's SEAQ International. Telefonica's base of managed clients in fixed-line and mobile telephony and pay television totalled 73.2 million (total client base of 78.4 million, with a 15% annual growth) at 31 December 2001, 9.3 million more than at the end of 2000. Another figure that indicates the company's size is the number of employees, which at end-December 2001 surpassed 161,500 worldwide. Telefonica is currently present in 49 countries. At year-end 2001, the Telefonica Group reported a net profit of 2,106.8 million euros and consolidated revenues amounting to 31,052.6 million euros, a year-on-year increase of 9%. About Telefonica Moviles Telefonica Moviles is one of the leading mobile telephony companies in the world, with a presence in 14 countries, a potential market of 434 million inhabitants and more than 31.5 million active managed customers at the end of June 2002. During 2001, Telefonica Moviles generated revenues of 8.411 million euros, EBITDA of 3,333.7 million euros and a net profit of 893 million euros. Telefonica Moviles trades on the Spanish stock exchanges and on the New York Stock Exchange under the ticker symbol TEM. About Grupo Pegaso Grupo Pegaso, headed by Alejandro Burillo Azcarraga, is a private group which participates in the Mexican economy through different companies, one of them being Pegaso PCS. In the area of the communications media, it is the country's leading producer of sports content for radio and the largest producer of content for wireless Internet applications. It owns the most influential sports daily in Mexico. The group also participates in pay television and in Internet via cable in different parts of the country. In telecommunications, it founded the first 100% digital company in Mexico and also markets satellite bandwidth in Mexico, and is involved in the distribution of Internet content through a satellite platform. In finance, it is the main shareholder of a financial group that includes a bank and a stock brokerage company. In sports, it owns several professional football teams as well as important rights to sports content. It also participates in numerous real estate and hotel projects, as well as in different social and cultural beneficiary programmes.
SOURCE Telefonica Moviles