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

To: Steve Fancy who wrote (1628)	4/13/1998 9:11:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

FOCUS-Brazil moves to keep phone selloff on track By Adrian Dickson SAO PAULO, April 13 (Reuters) - Brazil on Monday moved to ensure the smooth privatization of its telecommunications sector despite the worsening health problems of Communications Minister Sergio Motta, a key figure in the massive state sell-off plan. biz.yahoo.com

To: Steve Fancy who wrote (1628)	4/14/1998 10:07:00 AM
From: 2brasil	Respond to of 22640

SteveMore stuff Clock Ticking for Telebras Cellulars This week's successful bid for the succulent Rio de Janeiro cellular license should leave Telebras (TBR:NYSE ADR) holders quivering. The Algar consortium won the Rio area contest with a highly aggressive bid in which it paid a massive sum for the license (1.5 billion Reals) and offered fees way below those currently charged by Telerj, the Telebras subsidiary that serves the city. Telebras will get broken up in a few months, and shareholders will receive shares in 13 successor companies, including four large wireline entities and eight cellular ones. (For a more detailed discussion of the plan, click here and here.) The ferocity of Algar's bid must raise serious questions about the prospects of those eight cellular companies. True, they are going to be sold this summer to cash-rich strategic investors that could galvanize management. But the days of easy profits are well and truly over. Telerj currently charges R308 for a cellular line; Algar is going to give the same line for only R49. Yet, some analysts are not predicting a total bloodbath -- in Rio de Janeiro, at least. The feeling is that Algar has been excessively aggressive and will find it tough to make money at the fees they intend to charge. Plus, the company only has a short period in which to gear up for to compete against Telerj's operations. However, these arguments do not apply to the City and State Sao Paulo, where the huge but inefficient cellular business of Telebras subsidiary Telesp looks extremely vulnerable. A consortium led by BellSouth (BLS:NYSE) won the Sao Paulo city license last July to compete against Telesp's cellular operations. Zain Manekia, Latin telecom analyst at SBC Warburg, is expecting BellSouth to steamroll Telesp's successor cellular company, which will cover both Sao Paulo state and city. The consortium has a raft of advantages over Telesp's business that will enable it to steal high-usage top-end customers. Unlike Telesp, it has the technological ability to offer voicemail and caller ID as well as the extra capacity to offer free minutes. "I expect BellSouth to take as many as 15% of Telesp's top customers very early on," says Manekia. Competition like that makes the Amazonian jungle seem like a playground. Brazil Stuck in Stop-Go Stagnation Ready-made excuses were quickly rolled out by Brazil bulls to try and explain away a preliminary March trade deficit figure, which, at $818 million, was double analysts' predictions. Here's the best rationalization: Soy exports that normally go out in March were delayed by wet weather. True, no doubt. But the fact remains that this monster deficit was registered, even though the government recently slammed the brakes on the economy by doubling interest rates. A recession-bound economy should import a lot less. Should. Exclaims Arturo Porzecanski, chief emerging markets economist at ING Barings: "The country's hardly going to grow this year, and it will have a $30 billion trade deficit." As soon as economic activity picks up, the trade deficit will run even deeper with red ink. And that higher growth could start to cut in just before the October presidential elections. Political volatility combined with fears of resurgent current account problems. The markets are going to love that. When the trade deficit gets really bad again, the Brazilians may not have the political will for another strangulating interest rate hike. The politicians could decide to devalue the Real. The bears are betting on this happening early in 1999. Buenaventura Decision Any Day Now Peruvian mining company Buenaventura (BVN:NYSE ADR) is tensely awaiting a judge's decision on the abundant Yanacocha gold operation in northern Peru. A decision from Judge Elcira Vasquez is expected any day now, as she was supposed to have voted over a week ago. Buenaventura and Newmont Gold (NGC:NYSE), which already own large holdings in Yanacocha, have long been battling (on the same side) to acquire a stake in the gold operation that was relinquished by Bureau de Recherches Geoloqiques et Minieres (BRGM), a Belgian company. Buenaventura and Newmont say they have first rights of refusal on the stake. BRGM disagrees and says it wants to sell its 25% stake to Australia's Normandy Poseidon Three judges have voted against Buenaventura and two in favor. But even if Vasquez is revealed to have voted for Buenaventura, which some Lima sources expect, yet another judge will have to be appointed, as a final decision requires the backing of four judges. That last judge would probably not reach a decision for another 90 days. Yes, that would drag things out even further. But a vote for Buenaventura by Vasquez would be a nice short-term fillip for the stock, which closed today at $15.75. "My price target is $18.50, and that assumes Buenaventura loses the claim to the Yanacocha," says Josilu Carbonel, at Santander Investment in Lima, which has no investment banking relationship with Buenaventura. Endnotes Kind of gratifying to see Latin Loot correctly predict that the 30% rally in Mexico's Serfin (SFN:NYSE ADR) would not hold. The stock is down 15% since the story went out. Halfway back to nowhere. Browse the Archives Markets Companies TOP STORIES BULL RUN BEAR HUNT $10 STORE ARTICLES ELSEWHERE OPTIONS BUZZ Funds Commentary Markets c 1998 TheStreet.com, All Rights Reserved.