hursday January 13, 3:56 pm Eastern Time
ADR Report-Latin American market highlights-Jan 13
NEW YORK, Jan 13 (Reuters) - Sharp gains in Brazilian and
Argentine telecommunications issues on the back of Spanish
firm Telefonica's tender offer pulled Latin American ADRs
higher as investors gauged the move as an important ``sea
change' in the region's telecom industry.
Spain's Telefonica said it will own about $20 billion of new
stock in exchange for shares of four of its Latin American
units: Telefonica de Argentina (NYSE:TAR - news) , Telesp
Participacoes (NYSE:TSP - news) , Tele Sudeste Celular
Participacoes SA (NYSE:TSD - news) and Telefonica del Peru
(NYSE:TDP - news).
It said its offer to the regional operators' equity holders
represented a 40 percent premium over the stock price of the
companies in the last five days. This premium is what drove
the region's telcos higher.
``The issues are climbing because of the premiums they are
paying. It just highlights the situation that everything is
trading at cheap values,' said one ADR trader, adding that
there is a lot of talk about who's going to be bought. He
added that the money coming out of the four companies
involved with the Telefonica tender will find itself back
into other Latin American telcos, which is why all the issues
have rallied."
While the issues rallied amid the specter of possible
consolidation in the industry, one analyst said the move
would decrease liquidity in the sector, especially in places
like Peru and Argentina.
``It just reduces the amount amount of shares (investors) can
invest in Latin America. We may find a lot of money that may
go out of Latin America,' said Rizwan Ali, an analyst at
Bear Stearns. ``It's good to the extent that investors who
have put money in the four companies that get a 40 percent
premium.'
Bear Stearns top pick in the region's telecom sector is Tele
Norte Leste Participacoes SA (NYSE:TNE - news).
For the meantime, the announcement spurred gains in all of
the markets. Argentina's Merval stock index (^MERV - news)
bounded up 7.96 percent to 560.01; Brazil's Bovespa (^BVSP -
news) rose 4.1 percent to 17,298, Chile's IPSA index (^IPSA -
news) rallied 3.54 percent to 106.14 and Peru's General Index
(^IGRA - news) climbed 4.1 percent to 1,892.72.
Also helping Brazilian issues was the passage of a bill in
the Brazilian conference by the Lower House, which gives the
government discretion over 20 percent of the public revenues.
The second round vote is expected to take place within two
weeks, Deutsche Bank said in a research note.
The following are other emerging market highlights:
* * *
BRAZIL - Telebras SA (NYSE:TBH - news) soared 14 to 136.
Telesp ADRs climbed 4-13/16 to 29-5/16. Tele Sudeste rocketed
10-7/8 to 48-3/16 and Telsp gained 4-3/4 at 29-1/4.
On a non-telecom note, Deutsche Bank raised its estimates on
Unibanco from the fourth quarter to $0.71 per ADR from $0.63
per ADR. Its full-year estimates are now $3.08 per ADR. Its
ADRs were last up 11/16 to 28-11/16.
* * *
CHILE - Tele Norte Leste ADRs climbed 3-13/16 to 27-9/16 and
Companhia de Telecommunications (NYSE:CTC - news) ADRs gained
2-1/2 to 20-5/8. SG Cowen raised its rating on the latter
to strong buy from buy. It also climbed amid hopes that
Telefonica may increase its stake in the company, which is
also a unit of the Spanish firm.
* * *
ARGENTINA - Telefonica de Argentina SA (NYSE:TAR - news) ADRs
climbed 7-15/16 to 37. Telecom Argentina (NYSE:TEO -news),
which was not part of the Telefonica tender, was raised to
strong buy from buy by SG Cowen. Its ADRs climbed 4-1/4 to
37-1/2.
* * *
MEXICO - Telefonos de Mexico (NYSE:TMX - news) ADRs rose 4-
13/16 to 118-5/8. Grupo Iusacell (NYSE:CEL - news) ADRs
climbed 1-5/8 to 15-11/16. Dresdner Kleinwort Benson raised
its rating on the cellular company to buy from add.
On a non-technology note, Deutsche Banc Alex Brown cut its
rating on pipe maker Tubos de Acero SA de CV, or Tamsa,
(AMEX:TAM - news) to market perform from buy. Its ADRs were
last off 7/16 at 15-9/16.
* * *
PERU - Telefonica del Peru, another of the companies
Telefonica tendered for, rose 3 to 16-3/16 in New York. |
