DJ Brazilian Telecom Stocks Soar On Telefonica Offer
By STEPHEN WISNEFSKI
Dow Jones Newswires
SAO PAULO -- Brazilian telecommunications stocks are posting huge gains
at midsession Tuesday on optimism about consolidation in the sector
after Spain's Telefonica SA (TEF) announced a $330-million tender to
increase its stake in four cellular phone carriers.
After the market close Monday, Telefonica launched a bid to acquire all
outstanding shares in Telerj Celular SA and Telest Celular SA. Together
with Spanish power giant Iberdrola SA (E.IBR), Telefonica made a similar
offer for Telebahia Celular SA and Telergipe Celular SA. Telefonica-led
groups purchased controlling stakes in the operators at last year's
privatization of federal holding Telecomunicacoes Brasileiras SA (TBR).
While shares in the four cell phone carriers won't trade again until
Friday, preferred shares in Sao Paulo fixed-line giant Telesp SA, also
controlled by Telefonica, were up 8.2% to 237.00 reals ($1=BRR1.6695),
while ordinary shares had tacked on 9.5% to BRR132.00 by 1750 GMT.
Telesp Celular SA - owned by Portugal Telecom SA (PT) - and Telecom
Italia SpA-controlled Telepar Celular SA also are soaring. Telesp
Celular preferred shares had jumped 10% to BRR82.50. Preferred shares in
Telepar Celular led the advancers at midsession, up 17% to BRR102.00.
The Sao Paulo Stock Exchange's Bovespa Index was up just 1.4%.
Timing Of Announcement Surprises
"It's all speculation at this point about the prospects for further
consolidation in the sector. There's nothing concrete to justify these
gains," said a fund manager at a large Sao Paulo bank. "Many people are
hopeful that other groups will boost their stakes in the local
telecoms."
"Of course it's speculation, but (the Telefonica news) also creates a
positive momentum for these stocks because people realize just how cheap
they are," another Sao Paulo trader said, adding that a similar decision
by Telefonica to buy up Telesp shares could involve astronomical
earnings for shareholders.
Officials from Telefonica and Portugal Telecom weren't immediately
available for comment Tuesday on future plans.
Analysts said Telefonica's announcement Monday was a bit of a surprise
in terms of timing, but that consolidation is widely anticipated by the
market.
"Obviously people are thinking now that Telefonica could do the same
thing with Telesp and that it's part of a broader trend in the sector,"
said Sergio Missima, an analyst at Banco Fator in Sao Paulo.
The deal announced Monday by Telefonica is valued at up to BRR550
million - or a maximum of $330 million - with the two Spanish groups
offering a 50% premium over the price of shares at the close of trading
last Friday. The operation is still awaiting the final approval of
Brazil's Stock Market Commission, or CVM.
-By Stephen Wisnefski; 55-11-813-1988; swisnefski@ap.org |
