- The Washington Times - Wednesday, August 9, 2000

AOL Latin America Inc. closed higher in first-day trading, a day after raising $200 million in its initial public offering of stock.

Stock in the AOL venture closed at $8.44 a share on the Nasdaq Stock Market yesterday, up 5.5 percent from its modest offering price of $8 per share.

AOL Latin America, which began selling Internet service late last year when it opened for business in Brazil, remains substantially smaller than its U.S. counterpart. Sterling Va.-based AOL has more than 23 million subscribers, and AOL Latin America had 123,000 subscribers as of June.

But it's an emerging market, analysts said.

"The opportunity is huge," AOL Latin America Chief Executive Charles Herington said from Buenos Aires, where the company began marketing Internet access yesterday.

The 25 million shares of AOL Latin America stock priced at $8 late Monday raised $200 million. The shares were priced between $15 and $17 each before being lowered to $8 to $10 a share due to lagging interest.

Even though AOL Latin America had hoped to raise as much as $425 million in its IPO, Mr. Herington said he was pleased with the initial stock offering.

"We consider it a big achievement to raise $200 million in a market that isn't exactly ideal for an IPO," he said.

AOL Latin America may have aimed a bit high when it set its IPO price range at $15 to 17 per share, said Michael Falbo, analyst at ipoPros.com Inc., a Boulder, Colo.-based firm tracking IPO performance.

"It was a little ambitious perhaps," Mr. Falbo said. "You would expect AOL to have an enormous subscriber base, and they don't have that."

That's due in part to the fact few Latin Americans have Internet access. But it is among the fastest-growing in the world.

"It's not as big as the U.S. Maybe you can look at it as a growth market," said Marc Alexander, analyst with IDC Latin America, a Mountain View, Calif.-based research firm.

About 8.4 million Latin Americans had Internet access at the end of 1999, according to IDC Latin America, and that's expected to grow 250 percent to 29.4 million subscribers by the end of 2003, the research firm predicts.

One competitive hurdle in Latin America that pay-for-service Internet-service providers face is the growth of free ISPs, Mr. Alexander said.

AOL Latin America charges the equivalent of $13.94 a month in Brazil, but it lowered that fee in January from the equivalent of $19.55 a month in response to competition from free ISPs.

Many of the free ISPs provide undependable service and will not be able to sustain themselves, Mr. Herington argued.

"The free services made a big splash, but I think it has stabilized," he said.

About 90 percent of all Latin American Internet users are in six countries now Argentina, Brazil, Chile, Colombia, Mexico and Venezuela.

AOL Latin America is doing business in just Argentina, Brazil and Mexico. It plans to sell service in Chile, Colombia and Venezuela later, but it hasn't determined when it will open for business there, AOL spokeswoman Tricia Primrose said.

For the nine months ending March 31, 2000, AOL Latin America had revenue of $5.2 million and a net loss of $52 million.

AOL Latin America is a partnership between AOL and Cisneros Group, a Venezuelan media group.

AOL Latin America is based in Fort Lauderdale, Fla.

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