 Focus on the Customer. This is Embratel's motto!
This year marked the revival of the development of Embratel in the telecommunications market in Brazil, when the control of its stock was purchased by Teléfonos de Mexico (Telmex) Group, a corporation with recognized experience in the industry.
When Telmex purchased the control of the stock in July of 2004, Embratel was plunged into a serious financial crisis with a debt of over R$ 4,1 billion. The situation was all the more serious because of dropping revenues and marketability problems due to significant market losses in its long distance domestic and international calling service, and serious default levels as well. Additionally, it was facing tax and legal demands that might exceed R$ 6 billion. The company's credibility was low and its future was being questioned.
To take the charge, Telmex purchased from US-based MCI - that had been controlling Embratel since its privatization in 1998 - the 19.26% participation in its total capital and 51.79% in the voting share of Embrapar, the controlling company of Embratel.
Still during 2004, the group spent R$ 745,8 million in the purchase of minority stockholder papers ("tag along"). Additionally, they increased their capital to defray high cost debts that had been suffocating the company. A strategic decision directed the actions of Telmex: to turn Embratel into its development tool in Brazil.
|
