RESEARCH ALERT-Telebras maintained as buy
SAO PAULO, Oct 14 (Reuters) - HSBC James Capel said it maintained its buy rating and earnings estimates for Brazil's Telebras S.A. (TEL_P.SA) (TEL.SA) after the government suggested the 300-real installation fee would be cut.
HSBC analyst Paul Aran said in a report Communications Minister Sergio Motta's suggestion last week that the fee would be cut to between 80 and 100 reais was unlikely to effect the federal holdings earnings anytime soon.
''The statement, however, does indicate a growing awareness of the changes that will occur as competition heats up in Brazil,'' he wrote.
He said any reduction in the fee would not have an impact on earnings until 1999 because it takes 24 months to obtain a telephone line in Brazil.
''Although Brazil does not keep an official waiting list, we would not be surprised if over three million potential customers are now waiting to acquire a line in the short term,'' Arans wrote.
At the end of August, Telebras reported some 15.9 million installed lines and HSBC James Capel expects line-growth of 17 percent by year's end, he said.
''Because line demand has remained strong, even with the installation fee of 300 reais, we do not believe that the company will be in a hurry to reduce this fee,'' he added.
Eventually, the rate were likely to drop below 50 reais but ''we do not exp 1/8ect this to happen for another three to four years,'' he added.
HSBC James Capel's EPS estimates for Telebras remain at $9.63 for 1997 and $11.38 for 1998.
Telebreas preferred was up 2.35 percent at 161.10 reais in Sao Paulo while its New York-traded American Depositary Receipt (ADR) was up 3 at 146-7/8 at 1629 local/1429 EDT.
..............david........you may need to wait for that buying opportunity........there are a lot of strong buys on this stock.......as i said......as it heads higher i will trail stops up.............good luck |
