FOCUS-Markets celebrate success of Telebras sale
By Adrian Dickson
RIO DE JANEIRO, July 30 (Reuters) - Brazilian markets on Thursday toasted the success the
country's massive Telebras privatization one day after some of the biggest names in global
communications paid $19 billion for Latin America's largest phone network.
Telecom shares on the Sao Paulo stock exchange soared, a sign investors approved of the influx of
new management and investments that will follow Wednesday's auction.
Investors tapping into shares of the recently privatized telecom giant fueled a rally, boosting the Sao
Paulo Bovespa stock exchange index 4.32 percent in heavy trading by 4 p.m. (1900 GMT).
''More than mere relief, euphoria is the word. The world's second biggest privatization exceeds best
expectations,'' wrote Banco Icatu analyst Marcelo Mollica Jourdan in a report to investors.
Shares in Rio de Janeiro cellular unit Telerj Celular (TRJC6.SA), snapped up by Spain's Telefonica
(TEF.MC), surged 10 percent by the late afternoon while stock in Telesp Celular (TSPC6.SA), the
former Sao Paulo cellular company sold to Portugal Telecom (PTCO.IN) jumped 8.34 percent.
A handful of Europe's largest telephone companies grabbed the lion's share the Telebras network.
Between them Spain's Telefonica, Portugal Telecom (PTCO.IN), Telecom Italia (TIT.MI) sucked
up seven of the 12 Telebras spinoffs and generated almost 75 percent of the privatization proceeds.
Analysts said the surprising absence of large U.S. companies was a sign that the turbulence in their
own telecommunications market hadn't allowed them to catch sight of the opportunities in Brazil.
For most of the big investors Thursday was a time to sit back at take stake of their multibillion dollar
purchases.
''The work is only just beginning. The next few weeks are going to be extremely hectic,'' said Jose
Maria Manuel Massot, a spokesman for Telefonica.
He said Telefonica's senior management was readying plans to call special shareholder assemblies in
the three companies they had acquired and choosing new directors to represent them on their
boards.
Another immediate concern for all buyers in Wednesday's auction was to ensure they could come up
with a required 40 percent of the value of their purchase in cash before a government-set August 4
deadline.
In Brasilia officials were still toasting the boon the smooth four-hour Telebras auction will represent
for Brazil's hard-pressed fiscal accounts.
The $19 billion result was $7.4 billion above the $11.7 billion asking price or, as one analyst put it, a
sufficient amount to allow authorities to slice off 7.0 percent of Brazil's total federal debt in just one
go.
In a moment of rare effervescence, President Fernando Henrique Cardoso told reporters, ''never
has there been a privatization like this in the history of capitalism.''
Cardoso has good reasons to be pleased. Newspapers billed the Telebras auction an extraordinary
success describing it as the turning point for the telecommunications industry in Brazil.
''A huge victory for the government,'' read Thursday's lead editorial in daily O Estado de Sao Paulo.
Analysts said the success of the Telebras privatization would help boost Cardoso's candidacy as he
prepares to run for a second four year term in the October national elections.
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