AT&T, Italian phone carrier join

Journal Record, The (Oklahoma City), Jul 3, 1997

NEW YORK (AP) -- Outflanked by rivals in key overseas markets, AT&T Corp. fought back Wednesday by aligning with Italian phone carrier Stet to take advantage of the carrier's strength in Latin America and Europe.

AT&T and Societa Finanziaria Telefonica per Azioni SpA, or Stet, said they formed a joint venture to sell phone services in the booming Latin America market starting next year. But the parties hadn't worked out key details such as size of investments or whether AT&T was buying a stake in Stet.

Stet's Latin America presence includes stakes in companies in Brazil, Chile, Bolivia and Argentina. Stet also plans to join Unisource, a European alliance of AT&T and three other large carriers, and plans to sell AT&T's Unisource services in its home country. In turn, Unisource will help sell Stet's services elsewhere in Europe. AT&T's deal comes just four days after the breakdown of talks to merge with SBC Communications Inc., the largest U.S. local phone company, effectively ended one way of getting more involved in Latin America. SBC has a 10 percent stake in Mexico phone carrier Telemex and a presence in Chile as well. AT&T has come under mounting pressure from analysts and industry observers to boost its presence overseas. It and other telecommunications companies are pushing into Latin America and other markets where telephone service is spotty because growth is peaking in the U.S. and other developed markets. But in a setback for AT&T two months ago, Spain's No. 1 phone company, Telefonica, dropped out of Unisource and allied with British Telecom and MCI. Telefonica had been considered a likely partner for AT&T in Latin America. While some U.S. rivals have favored direct investments in foreign phone companies, AT&T has mostly relied on joint agreements that involve it and partners selling each other's services. Earlier, Stet had joined with a Spanish electricity company to offer to buy Retevision SA, Spain's second-largest phone carrier. Spokespeople for AT&T and Stet on Wednesday said no decision had been made on whether the deal in Spain would extend to AT&T.