FirstCom Corporation operates as a Competitive Local Exchange Carrier (CLEC) in five major metropolitan business centers in three South American countries, including Santiago, Chile; Lima, Peru and Bogota, Cali and Cartagena, Colombia. The Company primarily targets business customers and other telecommunications carriers and other high volume users by offering a wide range of high bandwidth integrated services including voice, data, video, audio and Internet services. Specific service offerings in each country vary depending on the current concessions held by FirstCom in the particular country, local laws and regulations and the infrastructure in the country. In Chile, the Company currently holds concessions to provide voice and data transmission services and value-added services on a private line basis, public switched domestic and international long distance services and public switched local services. FirstCom also maintains a concession to own and operate satellite earth stations throughout Chile.
Through its Chilean subsidiaries the Company currently provides its corporate customers in Santiago with services such as high quality voice and high-speed data communications services on a private line basis, LAN to LAN interconnections, dedicated channels for access to local information warehouses, such as credit bureaus, etc., remote terminal access, PBX to PBX connections, remote printing capabilities, local and wide area network design, engineering, installation, systems' integration and support services, domestic and international long distance services, that are switched and transported, in part, through its own gateway switch and satellite earth station, as well as through interconnections with other Chilean long distance carriers, Internet access services on a dial-up and dedicated access basis, as well as value-added services, such as web-hosting and corporate e-mail. FirstCom's services are provided through its approximately 120-kilometer ATM digital fiber optic network, which currently extends through most of Santiago's downtown business district and the outlying industrial park and airport corridors.
Chile's local and long distance markets were both opened to competition in 1994, with the only constraint being a four-year long distance market share cap imposed on Chile's former local service monopoly, CTC. There are currently five telecommunications groups that provide both local and long distance services, three of which also provide data services. There are also three other licensed providers of local telephony services and four other licensed providers of domestic and international long distance services. In the long distance market, Entel, the former long distance PTT, has a market share of approximately 40.4% for domestic long distance and 37.5% for international long distance. In the local telephony market, CTC, the former local services PTT, has a market share of approximately 91%. Both CTC and Entel operate fiber optic loops in Santiago, while FirstCom Chile operates a passive point-to-point network built using a star topology.
FirstCom Chile currently services more than 300 customers, including Xerox de Chile S.A., Universidad Catolica de Chile, Universidad de Santiago, Banco Santander, Bolsa de Comercio, Sky Chile, Dicom (Equifax), World Trade Center, Sonda S.A., Diario La Nacion, Pro Chile and many others. For data and Internet services, it charges a monthly fee for its services based on the length of the contract and the type and quantity of services provided. FirstCom Chile provides domestic and international long distance services to approximately 800 business customers and more than 5,000 residential customers through annual service contract arrangements. In addition, during the last three months of 1998, it provided casual dialing services to approximately 20,000 non-subscriber users. FirstCom Chile also provides routing services to a number of other long distance carriers including Entel.
In May 1996, the Company acquired Resetel S.A., now known as FirstCom Peru S.A., based in Lima, Peru which holds a concession to provide local private line voice and data services. FirstCom Peru offers high-speed data transmission services on a private line basis, including LAN to LAN interconnection, remote terminal access, dedicated channels for access to the Internet and voice services on a private line basis. It provides services through its approximately 700 kilometer ATM digital fiber optic network that currently extends throughout the major commercial and industrial districts of Lima and the port city of Callao. As a result of the accelerated liberalization of Peru's telecommunications markets and termination of Telefonica de Peru's exclusive concession to provide public switched local and long distance telephony services effective August 1, 1998, FirstCom Peru applied for and was granted a concession to provide international and domestic public switched long distance voice services in Peru. It intends to expand its existing service offerings to provide long distance public switched telephony in 1999. FirstCom Peru has also applied for and anticipates receiving a concession to provide public switched local voice services in Peru, although no assurance can be given in this regard.
Peru's telecommunications market is dominated by Telefonica, a company formed by the merger in 1994 of the former local telephone service PTT, Compania Peruana de Telefonos and ENTEL, the former long distance telephone service PTT. It is 35% owned by Telefonica de Espana S.A. Telefonica announced plans to devote a large amount of its resources over the next few years to install hundreds of thousands of telephone lines to provide basic telephone service. Currently, Peru's only other wireline telecommunications carrier is Tele2000, approximately 58.7% of which is owned by BellSouth Corporation. It currently operates cellular, public pay phone and cable television services in Lima and other Peruvian cities. FirstCom Peru currently services 30 customers in Peru, including Interbank and Sony Music Entertainment Peru S.A. It seeks to enter into contracts with new customers for a term of at least two years. Prices charged to customers vary in accordance with the customer's requirements based on the number of locations, type of services, transmission rates and length of service contracts.
On February 2, 1999, FirstCom acquired 76% of Teleductos S.A., a company operating in the Colombian cities of Bogota, Cali and Cartagena. Teleductos provides over 130 multinational, national and local businesses a broad array of high quality data communication services, including point-to-point and point-to-multipoint network services from speeds ranging from 19.2 Kbps to 100 Mbps, for Intranet, Extranet and Internet services. Its services are provided over approximately 580 kilometer digital high-speed fiber optic network, which currently extends through the commercial and industrial areas of Bogota. Teleductos has established joint venture alliances to complete the installation of local fiber optic infrastructure and last mile fiber optic access in Cali and Cartagena. During 1999, the Company intends to complete an upgrade of this fiber optic network by replacing existing SDH nodes with an ATM/IP backbone platform.
Colombia's telecommunications market has been dominated by the incumbent long distance operator; however, Telecom has limited local network presence relative to Empresa de Telecommunicaciones de Santafe de Bogota (ETB), Empresas Publicas de Medellin (EPM) and EMCATEL the telecommunications entity which separated from Empresas Municipales de Cali (EMCali) in Bogota, Medillin and Cali, respectively. Its initial investment in Teleductos resulted from interest in finding alternative last mile providers to reach large long distance corporate customers. Teleductos currently services approximately 130 customers in Colombia including, Mobil, Compuserve De Colombia S.A., General Motors Colomotres, Mobil De Colombia S.A. and several carriers and international financial institutions. It offers and markets to its current and potential clients any of the available service offerings which include ATM services, Internet, Ethernet, fast Ethernet, video, voice, token ring, frame relay and LAN to LAN interconnection. Additionally, there are also several companies that provide value-added services including Impsat, Telegan, Emtelco, Teledatos and Americatel. These companies provide domestic telecommunication network solutions to corporate customers, although the traditional focus has been on the provisioning of domestic satellite based VSAT solutions.
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