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

To: md1derful who wrote (22441)	8/13/2001 2:36:34 PM
From: Art Baeckel	Read Replies (1) \| Respond to of 22640

Tele Norte Leste Part S A NYSE: TNE Last Update: 12:57:00 PM ET Aug 12, 2001 Deadbeats to dent Brazil Telemar's Q2 earnings By Renata de Freitas SAO PAULO, Brazil, Aug 12 (Reuters) - The lightning expansion of Brazilian phone company Telemar's wireline network, already the country's largest, will prove a double-edged sword for its quarterly earnings, to be reported Monday, analysts say. Telemar (TNLP4)(TNE), with a network that stretches from the beaches of Rio de Janeiro to the deepest Amazon across 16 states, will show an increase in provisions for unpaid bills although steep growth in line installations should bolster its cash flow, according to six analysts polled by Reuters. Telemar is forecast to report second-quarter earnings on Monday after the close of trading. But while analysts agree on the trend of Telemar's earnings and recommend buying the stock, their forecasts for net profit and cash flow vary widely. Analysts' forecasts of quarterly net profit ranged from 24 million reais ($10 million) to 213 million reais. That compares with an adjusted second-quarter 2000 profit of 164 million reais. For earnings before interest, taxes, depreciation and amortization (EBITDA) -- a measure of cash flow -- analysts forecasts ranged from as low as 975 million reais to 1.2 billion reais. In the second quarter of 2000, Telemar's EBITDA was 965 million reais. Analysts with Deutsche Bank, who came up with the most reserved predictions for Telemar profits in their report last week, expected second quarter revenues to grow 7 percent, in line with the results posted in the previous three-month periods. Yet they noted that the number of unpaid bills had risen sharply reaching 4.6 percent of gross revenues compared to 2.8 percent last year, which should affect profits. "Apart from that, we are concerned with the expansion ofthe number of employees by 39 percent year-on-year and 14percent in the last quarter compared to thew previous one," thereport said. "In the long term, we are concerned about Telemar's aggressive network expansion strategy and the diversification of revenues." Still, the Deutsche Bank analysts have a "strong buy" recommendation on Telemar. Banco Santander analysts, whose projections were the most optimistic, note that unpaid bills and blocked debtors' lines -- which amount to 8 percent of all Telemar's lines -- represent a problem, but in their view it is outweighed by lower costs of services that boost EBITDA. According to Santander's report EBITDA margin should reach 46.9 percent in the second quarter, compared to 45.7 percent in the previous three-month period. Still, Santander's analyst Bruno Queiroz told Reuters he expected Brazil's economic problems, such as the depreciation of the real currency, to continue affecting Telemar in the form of unpaid bills in the third quarter, too. ($1=2) REUTERS Rtr 12:57 08-12-01 Selector Code: reucoCopyright 2001, Reuters News Service ART