Brazil's Telebras net seen rising 13 pct in
Reuters, Friday, February 13, 1998 at 14:18
Before that, the government will split Telebras into 13
firms: eight wireless holding companies, three land-line
holdings and a long-distance operator.
Analysts expect some delay in Brasilia's selloff timetable
but foresee Telebras' sale to take place sometime in the third
quarter, paving the way for an overhaul of one of the world's
last major untapped telecoms markets.
Telebras plans to invest $5 billion this fiscal year,
mostly to install new phone lines as it prepares for
privatization and tries to whittle down Brazil's huge pent-up
demand for telecom service.
By James Craig
SAO PAULO, Feb 13 (Reuters) - Strong cellular and land-line
expansion should boost net profit at Brazil's federal holding
Telebras (SAO:TEL_.P) to $3.94 billion this year, up 13 percent
from 1997, analysts said Friday.
A Reuters poll of 11 bank analysts <BRAAD> showed forecasts
for consolidated 1998 net profit at Telebras, which is to be
broken up and privatized by mid-year, ranged from $3.39 billion
to $5.44 billion.
"Cellular is going to be the biggest contributor in terms
of growth this year," said Tony Figueiredo, a
telecommunications analyst at Caspian Securities.
Quick expansion of Telebras' land-line network in the
run-up to privatization, and by new private operators
afterward, should also help hoist net sales by 14.5 percent to
just over $16.2 billion, analysts said.
Brazil plans to rake in billions of dollars in the largest
privatization in Latin America's history when the region's
biggest telecommunications company goes under the auctioneers
gavel in June or July.
Much of the growth will occur in cellular services,
particularly at Telebras units operating in Sao Paulo and Rio
de Janeiro states, the country's wealthiest and most populous
areas.
"It's going to grow the fastest at Telesp and Telerj,"
Caspian's Figueiredo said.
Cellular net work growth, which could drive wireless
revenues up by as much 45 percent this year, will be spurred by
the onset of wireless competition from the newly private B Band
frequency, analysts said.
The cellular expansion will coincide with the splitting
from Telebras of wireless A Band frequency firms.
International and local investment banks surveyed by
Reuters forecast cellular terminals in service would rise to an
average 5.45 million in 1998, up from about four million last
year.
"You're also going to see significant expansion in land
lines," said Ronald Aitkin of Robert Fleming & Co Ltd in
London.
Analysts forecast average land-line growth of about 14
percent to 17.08 million versus roughly 15 million lines last
year. Meanwhile, operating income should climb by 29.7 percent
to $6.0 billion in 1998 versus $4.63 billion last year, the
Reuters poll showed.
The government clipped Telebras' 1997-98 capital
expenditure budget as part of fiscal austerity imposed in
November to counter the ripple effect from Asia's financial
crisis.
But analysts said the cuts should not affect earnings
because the spending plan only goes through August and most
cutting has been made already. 'What ever's going to come in
1997 has already been contracted, so that's not going to affect
the company's performance in 1998," said Aitkin.
Analysts also said they do not expect a rate hike or
personnel cuts at the firm this year, both of which would
affect Telebras' revenues and bottom line.
In Friday afternoon trading, Telebras's blue-chip preferred
stock was off 0.37 percent at 134.70 reais, while its common
(SAO:TEL) was down 0.93 percent at 107 reais. Telebras' American
Depositary Receipt (ADR) (NYSE:TBR) was down 13/16 at 119-7/8.
james.craig@reuters.com))
Copyright 1998, Reuters News Service |
