British telecom firm Virgin Mobile (VMLA) has raised US$86 million in equity capital to launch its brand in Mexico and Brazil, and bolster its existing operatiosn in other Latin American countries such as Chile and Colombia.
The International Finance Corporation (IFC) and the Central American Mezzanine Infrastructure Fund have also agreed to lend about US$40 million for the launch of Virgin Mobile Mexico. The British firm has current debt facilities with the IFC totaling US$19 million for its existing operations in Chile and Colombia.
“A subsidiary of Temasek, the Singaporean investment company that owns a portfolio of US$173 billion in global investments, led the latest equity round,” Virgin Mobile said in a press release. But it is not clear whether Temasek has also purchased a stake in the telecom firm.
Temasek, which has offices in Brazil and Mexico, is said to on the lookout for investments across Latin America. Singapore’s sovereign investors have stepped up investment in Latin America of late. According to Reuters, Brazilian online sports goods retailer Netshoes received a new round of $170 million investment led by sovereign wealth fund GIC.
Virgin is slated to launch its brand in Mexico this year and Brazil in 2015. It launched its operations in Chile in 2012 and then expanded to Colombia the following year. According to VMLA CEO Peter Macnee, the telecom firm is adding well over 100,000 new subscribers every month in the region.
Mexico’s telecom market is heavily dominated by the America Movil, but Carlos Slim’s firm may have to offload some of its assets after Mexican regulatory bodies imposed a 50% market share limit in May last year.
Virgin is offering voice services in Colombia and Chile, where it signed up more than 65,000 mobile users in a space of just four months. This sudden growth in Chile is also contributing to Virgin’s ambition to tap into Latin America’s growing telecom market.
“Virgin Mobile is perfectly matched for Latin America,” stated Virgin’s global chief Richard Branson.
The UK firm stated that it has filed an application with Brazil’s telecom regulator Anatel for an MVNO license after wrapping up an agreement with Vivo (a subsidiary of Telefonica) to obtain bulk access to network services at wholesale rates. Virgin has also signed a similar agreement with Telefonica to utilize its network in Mexico.
Virgin Mobile is the originator of the MVNO model. Instead of investing in building their own networks, MVNOs simply rent networks built by competitors. In Brazil, Anatel only started to regulate MVNOs in November 2010.