Spanish telecommunications group Telefonica will invest 5 billion reais ($1.7 billion) in Brazil next year to "modernize" its operations, a Brazilian govermment official said on Wednesday.

Communications Minister Eunicio Oliveira made the announcement after Telefonica chairman Cesar Alierta met with Brazilian President Luiz Inacio Lula da Silva on Wednesday.

Alierta told Lula that Brazil is an investment priority for the Spanish firm at this moment, according to Oliveira.Telefonica's operations in Brazil include fixed-line operator Telesp and cell phone company Vivo.

(From Reuters, October 20, 2004)

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