Merrill Ups Brazil's Tele Centro Oeste Celular To Buy
Dow Jones Newswires
May 23, 2001
NEW YORK -- Merrill Lynch Wednesday said it's raising its intermediate recommendations on Brazilian mobile telecommunications providers Tele Centro Oeste Celular (TRO) and Telemig Celular (TMB) to "buy" from "accumulate."
In a research note, the bank said it had been favoring wireline over wireless in Brazil since the end of January, but now believes it's time to selectively come back into mobile.
Both Telemig and Tele Centro Oeste posted better operating results for the first quarter than Merrill had expected, with earnings before interest, taxes, depreciation and amortization (EBITDA) margins above 35% with reasonable subscriber growth figures.
Among Brazil's other myriad mobile picks, Merrill also favors Tele Leste Celular (TBE). Portugal Telecom's announcement Monday that it would buy out the shares it doesn't already own in Telesp Celular (TCP) has raised the attractiveness of the entire sector.
If the Portugal Telecom tender is successful, dedicated Latin American investors may reinvest the proceeds into other sector plays.
"We continue to expect further consolidation in the Brazilian wireless industry and view TRO, TMB and TBE as likely participants which may provide additional upside potential," Merrill wrote.
In light morning trade, American Depositary Receipts for Tele Centro Oeste were down 3.7% to $8.90, while those for Telemig and Tele Leste Celular were down 2.2% to $45 and flat at $39, respectively.
-By Amy Guthrie, Dow Jones Newswires; 201-938-2225; amy.guthrie@dowjones.com |
