Portugal Telecom's New Brazil Ops To Be
Profit Motor
Dow Jones Newswires
LISBON -- Portugal Telecom SA's (PT) newly acquired Brazilian
operations will be a medium-term profit motor, the company said
Monday, reacting to investor worries about the burden of the purchases
on the bottom line.
"The acquisition of a controlling stake in Telesp Celular and of a minority
stake in Telesp Fixa perfectly matches PT's pre-defined strategy of
investment in highly attractive markets where we have competitive
advantages," PT Chairman Francisco Murteira Nabo said in a statement.
"They will constitute a powerful growth engine that in the medium-term will
boost group revenues and results to levels that would not be achievable in
a mature and fully liberalized European market like Portugal."
PT's shares were off 450 escudos (PTE) ($1=PTE182.58), or 4.3%, to
PTE9,999 on volume of 586,237 shares late in Monday's session, with
brokers reporting that uncertainty about the price PT paid for its Brazilian
acquisitions and its effect on profits were sparking the sell-off.
PT said it is "better prepared than anyone else" to benefit from Brazil's
growth potential, noting its cultural links to the former colony, its long-term
alliance with Telebras SA (TBR) and its "successful track record of
building a market leader position in a competitive market."
Last week, PT paid $3.01 billion for control of Telesp Celular, Telebras'
cellular provider for the Sao Paulo state, and alongside Spain's Telefonica
SA (TEF), took a 23% stake in Telesp Fixa, the same region's fixed-line
provider.
PT said it is already in "advanced negotiations" to reduce its Telesp Celular
stake to 51% by incorporating strategic partners. Telefonica, it said, has
agreed to take up a 35.8% stake, and Brazilian groups are expected to
purchase the remainder.
On the fixed line side, PT said the link to Telefonica "will allow us to
benefit from the proved experience of Telefonica in successful turnarounds
of acquired companies in Latin America."
It will also gain from "synergy, both in terms of revenues ... and costs,
through shared support areas, joint purchasing, and optimization of capital
expenditure, resulting from controlling positions in both the fixed and
mobile operators."
-By Erik T. Burns; 351-1-319-1863; eburns@ap.org |
