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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: steve kammerer who wrote (22321)	5/24/2001 2:49:38 PM
From: Steve Fancy	Respond to of 22640

Hello Steve, Sounds like you're luck has been much like mine:~)...sorry to hear that. My long term outlook hasn't really changed, hence I didn't sell it all. Just tired of watching these stocks move down with every piece of little bad news found throughout the world, then not rebounding as other markets do...always something. That coupled with the '02 presidential elections convinced me to raise some cash for some bargains I hope develop here at home over the next 30 days or so as we get into the heat of earnings warning season. I think US markets go lower yet as it seems technology companies seem to be bumping their recovery forecasts out. UBB I haven't been following that closely, but looks like it's been pretty strong. I had always maintained that if they did not win that if they did not win that auction awhile back that they would probably be bought. But again, not sure why anyone would rush with all the political trouble going on over there. Seems things could get a little worse before they get better. EMT scares me as the other wirelines get into the long distance business. Only reason I'm holding it is the P/E seems low relatively speaking and it is sitting right at an all time low. TCP I sold at 26 some time ago...I suspect the deal with PT will ultimately go through and based on that it should remain pegged to PT which I have no feel for. TEF I am holding for now but am going to look deeper into this one over the next couple weeks. TNE I am still bullish on longer term as the 1st or second largest Telco in Latin America, and we know that the BNDES is still sitting on that stake. I figure they may be forced into finally moving it here sooner than later and that may help limit downside. TSP...we traded that one for TEF Steve...I assume you just got a symbol confused? TRO, TMB, TBE and TCN I continue to hold as I think they will all be picked off soon...if not over the next few months I will look at unloading them. I don't hold a lot of the last four, but do plan on taking a closer look at valuations and potential buyout premiums over the next few weeks. Do you have any thoughts on these stocks? Best regards, Steve

To: steve kammerer who wrote (22321)	5/24/2001 6:17:22 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

PT Bid To Gain Edge In Brazil Telefonica JV May Flop Dow Jones Online News, 05/24/2001 18:12 By Terry Wade Of DOW JONES NEWSWIRES SAO PAULO -(Dow Jones)- Portugal Telecom SA's (PT) attempt to gain the upper hand in its $10 billion Brazilian wireless joint venture with Telefonica Moviles SA (TEM) may fail. The precarious balance of power between the two European telecoms giants in the joint venture will likely stay in Telefonica's favor, amid doubts that PT will succeed in its tender offer for Brazil's biggest wireless play - Telesp Celular Participacoes SA (TCP). PT said Monday it plans to issue 253 million new shares - equal to about 20% of its existing share capital - to buy up the 58.8% of the shares it doesn't already own in its Telesp Celular unit. If the tender goes the way PT wants, it will wind up with a 58% stake in the joint venture, which includes two PT units and three Telefonica operators. But if PT's hopes aren't met, its stake would likely climb to just 44%. As it stands now, PT is in danger of having less than 40% of the venture, which would force PT to give up joint control of the venture and hand the reins to Telefonica. When the deal was announced, PT's exchange ratio gave a premium of 40% to shareholders in Telesp Celular, based on share prices in the few days preceding the disclosure. The deal came with an estimated value of about $2.4 billion. But since then, PT's share price has slipped about 15%, greatly decreasing the attractiveness for Telesp Celular shareholders to tender their shares. "Based on current price levels and market sentiment, we think it is highly unlikely that the deal will go through," said Tucker Grinnan, telecoms analyst at Deutsche Bank. Grinnan pointed out, however, that the outlook might change as the tender process could drag on until September. When contacted, PT said it had no plans to sweeten the exchange offer and declined to comment on whether or not it believes the deal would be completed. But the company emphasized the long-term attractiveness of the deal, saying "We believe that this is a good deal for the PT group... and for shareholders." Local Stock Mkt Rule May Hinder Co, Affect JV Under a Sao Paulo Stock Exchange rule, if less than 67% of Telesp Celular's minority shareholders accept the offer, PT can only buy up 33% of Telesp Celular's free float. This would foil PT's effort to significantly augment its relative position in its joint venture with Telefonica. By buying a third of Telesp Celular's float, PT would wind up with just 44% of the venture. PT had little choice but to make the tender offer for Telesp Celular's shares. The January deal PT entered with Telefonica - which locked up over 43% of Brazil's roughly 22 million wireless users - gave each side equal representation on the joint venture's board. But under the deal terms, if either side's share of the joint venture's assets slips to below 40%, or goes above 60%, the dominant partner gains control. When the deal was struck, PT's assets comprised about 42% stake of the joint venture. But its position was threatening to slip to dangerously low levels in recent months after Telefonica made deals to increase its wireless holdings here. In February, Telefonica announced an all-out tender offer for shares of its Celular CRT SA (E.CLU) and in April said it would buy up Iberdrola's stakes in a handful of Brazilian mobile operators for $313 million. That left PT in a bad spot, with less than 40% of the joint venture - after accounting for Telefonica's pending deals with CRT and Iberdrola. "It was very important for them to increase their assets in the joint venture and this was the best and easiest way to do it," says Ricardo Fernandez of CLSA Emerging Markets. The only other way for PT to stay on equal footing would have been to make an acquisition in Brazil's rapidly consolidating wireless sector. Just before the joint venture was formed, PT in January acquired unlisted Brazilian mobile carrier Global Telecom in a deal valued at $2,600 per subscriber, far above the $950 per user the Telesp Celular tender offer implies. If 67% of Telesp Celular holders tender their shares, PT's joint venture stake would rise to 58% and likely put pressure on Telefonica to make the next expansionary move. As it stands now, it looks like PT will remain the minority partner, in terms of assets. To see a super-majority of Telesp Celular holders tender their shares, PT may be hoping that Telefonica SA (TEF) steps in to prop up of PT's sagging share price. Telefonica has said in recent months it wants to boost its stake in PT, currently at 5%, to 10%. But Telefonica may not want to step in at this point. Telefonica's investments in PT at the parent company level don't affect the power balance of the joint venture, but any added investments might impact PT's share price and, therefore, the success of PT's Telesp Celular tender offer. -By Terry Wade, Dow Jones Newswires; 5511-3813-1988; terry.wade@dowjones.com (This story was originally published by Dow Jones Newswires) Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved