CellStar Boosts Activation Business in Mexico By Investing in Joint Venture
06 April 2005 - 7:16AM
PR Newswire (US)
CellStar Boosts Activation Business in Mexico By Investing in Joint
Venture CARROLLTON, Texas, April 5 /PRNewswire-FirstCall/ --
CellStar Corporation (NASDAQ:CLSTE) today announced that its
subsidiary in Mexico, Cellular Express S.A. de C.V. ("CELEX"), has
signed a definitive agreement to invest in a joint venture with
Soluciones Inalambricas S.A. de C.V. ("Wireless Solutions") and its
individual partners. The joint venture, which will operate under
the name Comunicacion Inalambrica Inteligente, S.A. de C.V.
("CII"), will provide handset distribution and activation services
for Radio Movil Dipsa S.A. de C.V. ("Telcel"), the largest cellular
phone company in Mexico. CELEX will own 51% of CII and the other
49% will be owned by the individual partners of Wireless Solutions.
Subject to conditions outlined in the agreement, the deal is
expected to close during the second quarter of this year. CELEX and
Wireless Solutions combined currently operate 43 kiosks inside
Liverpool and Fabricas de Francia ("Liverpool") national department
stores in Mexico, in which they sell handsets, air time and related
accessory products, and provide activation services for Telcel. The
two companies also provide electronic delivery of airtime for
Telcel to any handset model in all 52 Liverpool department stores
nationwide. These segments of business for both companies will be
transferred to CII, the newly formed joint venture, making it the
only Telcel agent with nationwide retail capabilities. Under a
separate agreement between CELEX and CII, CELEX will be responsible
for managing the handset distribution to all of the Liverpool
retail locations. "In mid 2003 we announced our plans to restore
our operation in Mexico to profitability," said Robert Kaiser, CEO
and president of CellStar. "We believed increased activations would
be one of the key factors to our success; we aggressively pursued
that strategy and today we are pleased to announce a deal that we
believe will significantly increase our activations. Over the last
couple of years, we have significantly increased our activations
business in Mexico to an average of approximately 12,000 per month.
This new joint venture will allow us to more than double our
current monthly activation rate and provide future opportunities to
expand. We also believe it will further strengthen our relationship
with Telcel and lead to increased handset distribution
opportunities throughout Mexico." Latin America was CellStar's
strongest performing region in 2004. The Company expects fourth
quarter 2004 revenues in Latin America to be up approximately 40%
to 45% compared to the third quarter, and fiscal 2004 revenues for
the region to be higher than they have been in the last two years.
Operating income in Latin America is expected to be up
significantly for fiscal 2004 compared to 2003 when the Company
reported an operating loss of $5.0 million. Wireless Solutions has
been an authorized distributor for Telcel since 1991 and is among
the top five distributors for Telcel in Mexico. Wireless Solutions
currently has retail and wholesale operations in five of Mexico's
nine cellular regions. "We are excited about joining forces with
CellStar," said Miguel A. Kuri, general director of Wireless
Solutions. "Our combined industry expertise and relationships
should allow us to expand our Liverpool business model to other
nation-wide department stores, pharmacies, supermarkets and
convenience stores in Mexico." About CellStar Corporation CellStar
Corporation is a leading global provider of value added logistics
and distribution services to the wireless communications industry,
with operations in the Asia-Pacific, North American and Latin
American Regions. CellStar facilitates the effective and efficient
distribution of handsets, related accessories and other wireless
products from leading manufacturers to network operators, agents,
resellers, dealers and retailers. CellStar also provides activation
services in some of its markets that generate new subscribers for
its wireless carriers. For the year ended November 30, 2003, the
Company reported revenues of $1.8 billion. Additional information
about CellStar may be found on its website at
http://www.cellstar.com/ . This news release contains
forward-looking statements, as defined in the Private Securities
Litigation Reform Act of 1995. A variety of risk factors, including
the Company's ability to implement its business strategies, to
maintain its channels of distribution, continue to secure an
adequate supply of competitive products on a timely basis and on
commercially reasonable terms, improve its operating margins,
secure adequate financial resources, maintain an adequate system of
internal control, comply with debt covenants, and continually turn
its inventories and accounts receivable, as well as changes in
foreign laws, regulations and tariffs, new technologies, system
implementation difficulties, competition, handset shortages or
overages, terrorist acts, a decline in consumer confidence and
continued economic weakness in the U.S. and other countries in
which the Company does business and other risk factors, are
discussed in the Company's Annual Report on Form 10-K and most
recent Quarterly Report on Form 10-Q. Any one, or a combination of
these risk factors could cause CellStar's actual results to vary
materially from anticipated results or other expectations expressed
in the Company's forward-looking statements. DATASOURCE: CellStar
Corporation CONTACT: Sherrian Gunn of CellStar Corporation,
+1-972-466-5031 Web site: http://www.cellstar.com/
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