Telefonica (MADRID:TEF) says to invest $11 bln in
Reuters, Tuesday, August 04, 1998 at 16:12
Telefonica said shareholders could expect to see the
benefits of its Brazil purchases by 2001.
The Spanish carrier said the number of telephone lines
offered by Telesp would nearly double to 11 million by 2002.
The coveted fixed-line company serves Sao Paulo, Brazil's
richest state,
Telesp's net income will quadruple to $2.7 billion in the
same period, Telefonica CEO Juan Villalonga told analysts.
The Spanish company announced its investment plans days
after the initial euphoria over last Wednesday's auction faded.
Analysts have begun to voice concern that Telefonica had
overextended itself. Standard & Poor's said it could lower the
Spanish company's rating, and its share price has receded.
Villalonga sought to reassure analysts during the
conference call. "We will have a critical mass to enhance
revenues to improve returns for our shareholders," he said.
Tele Sudeste Celular, the cellular operator that serves the
Rio de Janeiro and Espirito Santo markets, will boost installed
lines to 2.22 million from the current 980,000, Villalonga
said.
Tele Sudeste's net income is expected climb to $725 million
by 2002, more than triple its current earnings.
Telefonica is also negotiating with Portugal Telecom
(LIS:PTCO) to buy a stake in Telesp Celular Participacoes,
another Telebras unit that provides cellular service in Sao
Paulo state. Telefonica could buy 34.5 percent of Portugal
Telecom's holding, Villalonga said.
He said the Spanish carrier was also in talks with MCI
Communications Corp. (NASDAQ:MCIC) to buy a stake in Embratel,
Telebras' long-distance carrier, though he declined to comment
on the percentage of the consortium that was under discussion.
Copyright 1998, Reuters News Service |
