Brazil cellphone,utilities stocks surge amid buyback talk
Reuters, 06/13/2000 16:44
By Rosa Symanski
SAO PAULO, June 13 (Reuters) - Expectations of share buybacks and capital reshuffle in some second-tier Brazilian cellular phone and electric utilities firms have propped up their shares, spurring the return of investors to the stock market from safer interbank deposits, analysts say.
Telecommunications market analysts single out Tele Centro Oeste Celular preferential stock (SAO:TCOC4), which has risen 86.2 percent so far this year, or 11 times the yield on interbank depositary certificates of 7.8 percent. The Bovespa (INDEX:$BVSP.X) blue-chip stock index fell 4 percent in the same period.
"Investors assume that the cellular phone sector has lots of restructuring possibilities, with companies buying each other," said Mauro Mazzaro, an analyst with Planner consultants.
Market operators, however, could not say what concrete expectations they had for Tele Centro Oeste Celular.
Analysts also point to Telesp Celular Participacoes ordinary stock (SAO:TSPP3), which has risen about 75 percent in 2000, Tele Celular Sul ordinary (SAO:TCSL4) which is up over 40 percent and Tele Nordeste Celular preferential (SAO:TNEP4) which has grown some 19 percent.
Olivier Miznei, a telecoms analyst with CSFB Garantia, also said the stocks had risen on expectations of a share buyback or control shuffle in the companies. Market analysts and operators say Tele Centro Sul and Tele Celular Sul should soon announce buybacks of their shares in the market.
Analysts said Portugal Telecom's (LIS:PTCO) buyback of shares in its Brazilian cellular unit Telesp Celular (SAO:TSPP3) had also helped the mood in the market. PT paid 1.3 billion reais ($738.9 million) on Tuesday to boost its stake in the firm as it seeks to gain a bigger chunk of the operator's fast-growing profits.
Holders of common shares agreed to sell back 44 billion shares to the Portuguese parent in the previously announced buyback offer, or 65 percent of the common shares outstanding.
The second-tier cellular companies' stocks were also picking up some of the slack as investors migrate out of the Telesp Celular shares and out of Telesp (SAO:TLPP4) and Tele Sudeste Celular (NYSE:TSD) (SAO:TSEP4), two telephone companies controlled by Spain's Telefonica (MADRID:TEF).
Telefonica is in the process of swapping shares in those units for its own stock, which it plans to list in Brazil.
Other stocks which recently also outperformed interbank deposits by yields are two Sao Paulo's electricity distributors EPTE (SAO:EPTE4) and Transmissao Paulista (SAO:TRPL4), which are in negotiations that may lead to a merger in data transmission, according to market sources.
Analysts said the rumor first hit the market, significantly boosting prices of both stocks, at the start of the year, but later the two second-tier and not very liquid issues fell again as no agreement had materialized.
Last week, however, the talk of a merger returned with a vengeance, bringing a sharp 40-percent rise in EPTE and a 14-percent rise in Transmissao. On Monday, both stocks edged up again in a falling market where profit-taking prevailed.
Gabriel Moura, an analyst with Banco Bilbao Vizcaya, was generally optimistic about the stock market, saying that many investors were now migrating from interbank deposits into stocks.
"The bourse's recovery and lower interest rates are already prompting investors to switch from deposits into the stock market.
"This migration should intensify in the coming weeks due to a general improvement in the economic setting as well as the change in the general investment culture that economic stability should bring."
The blue-chip Bovespa index has risen 5.6 percent so far this month, but is 5.8 percent lower than at the start of the year.
Copyright 2000, Reuters News Service |
