TMCnet News

AOL pulling out of Brazil
[February 08, 2006]

AOL pulling out of Brazil

(EFE Ingles Via Thomson Dialog NewsEdge)Sao Paulo, Feb 8 (EFE).- U.S.-based Internet giant AOL plans to cease operations in Brazil next month and shift its subscribers to Terra Networks, a subsidiary of Spain's Telefonica.

AOL Brazil placed ads Wednesday in major Brazilian newspapers to announce the planned March 17 shutdown. While the ads did not mention Terra, a statement on the AOL Brazil Web site urged subscribers to open an account with the Spanish Internet service provider.

"In fact, an accord exists whereby subscribers who pass from AOL to Terra have access to a series of benefits," Terra Brasil spokeswoman Luciana Lima told EFE.

She cited a document filed with the U.S. Securities and Exchange Commission certifying that Terra is prepared to pay between $760,000 and $1.9 million to acquire AOL Brazil's client base of roughly 150,000.

The final amount of the payment will depend on how many AOL Brazil customers actually sign up with Terra.

Terra Brasil currently has more than 2 million subscribers.

The decision to pull out of Brazil comes as America Online Latin America - AOLA - struggles to emerge from bankruptcy, and was made possible after a U.S. bankruptcy court last month approved the transfer of subscribers to Terra.

AOL entered Brazil in late 1999 when the dot-com boom was still going strong, hoping to make South America's biggest and most populous nation the cornerstone of its operations in the region.

But AOL Brazil never became a major competitor in the country's ISP market and the broader financial crisis at AOLA spelled the end for the Brazilian venture.

In May 2005, AOL Brazil laid off 80 employees at its Sao Paulo headquarters, and moved in November to dissolve its partnership with Brazil's second-biggest bank, Itau, which held 12 percent of AOLA.



[ Back To's Homepage ]