In 1996, ABT deviated from its sales and delivery of operation systems to invest in the telecommunications infrastructure of a Latin American country. This investment in rural infrastructure in Latin America was a major departure from ABT's short-term, project-oriented, turnkey operations. For several years, top executives had discussed the possibility of pursuing investment as opposed to sales-only deals. This investment was initiated, managed, and controlled by top managers in Montreal, but local managers were htred to help with the installation and operations of this investment.
Top executives outlined several reasons for ABT to pursue an investment in rural telecommunications operations. According to one manager close to this deal, “Many people confuse rural with poverty, but they miss out on a very good investment and tremendous pent-up demand.” Most of the large hardware equipment manufacturers have moved from selling equipment and services to investing and buying up licenses in international markets. As one top manager stated, “It was a difficult decision to invest in rural telecom, but our board of directors was convinced it was a good idea.. . we realized that we could supply our equipment at no markup and then sell a 51 percent stake in our investment, perhaps using this to fund future investments in rural telecommunications.”
Concerning the challenges inherent in starting this new venture, one manager explained, “We are not experts at running a telephone company; we don't know how to bill or do maintenance.” In 1998, ABT hired a local manager away from the national telephone company to run the firm. Consultants with experience with Bell Canada were also helping with the venture. By 1998, ABT had set up 1,000 telephone lines and had 100 employees; the push was to install pay phones, a legal requirement of the license. ABT managers estimated that it would take about 8,000 to 10,000 installed lines to break even, probably in 1999. Once this ritual venture establishes a proven track record, ABT managers plan to sell off a portion to a local partner. If this venture is successful, AI3T managers are considering future investments in rural telecommunications. One top manager stated, “We are being approached by people in many markets around the world about potential investments.”
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