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

To: Steve Fancy who wrote (6322)	8/5/1998 1:15:00 AM
From: Oracle	Read Replies (1) \| Respond to of 22640

Could be, we shall see. Thinking about what will happen to option exercise, my feeling is that option holders will get 12 ADR's, I cannot see it working any other way. For example, If I sold covered calls on TBR because I had say 1000 shares, then I could sell 10 covered calls, when these are exercised then if TBR is still listed then I would give them my shares, if TBR is no longer listed, (the shares have been automatically swapped for 12 ADRS'), then I will hand over the 12 ADR's. The discussions about getting TBH's seems flawed, as I would need to pay the difference between the 12 ADRS and the TBH, + commission to fulfill the exercise. Seems like the 12 ADR's is the only thing that would work, unless the CBOE paid for the conversions, which seems unlikely. What do you think ?

To: Steve Fancy who wrote (6322)	8/5/1998 1:18:00 AM
From: Jerry A. Laska	Respond to of 22640

FOCUS-Telefonica sees Brazil-buy gains from 2001 By Simon Gardner MADRID, Aug 4 (Reuters) - Spanish telecommunications group Telefonica de Espana (TEF.MC) on Tuesday forecast that its investments in Brazil's Telebras (TEL_p.SA) will boost its earnings per share from 2001, saying the purchases were ''fully covered.'' In a statement published after a conference call with sector analysts, Telefonica Chairman Juan Villalonga said Telefonica was ''very interested'' in increasing its stakes in two of the units it won at last week's Telebras auction, Telesp and Tele Sudeste Celular. ''The Brazilian units will definitely contribute to the group from 2001 and perhaps even from 2000,'' the statement said. ''The acquisitions in Telebras are fully covered by Telefonica.'' Telefonica, which bid in a consortium with Spanish bank BBV (BBV.MC), energy group Iberdrola (IBE.MC) and Portugal Telecom (PTCO.IN), is estimated to have spent more than $6.5 billion on fixed line operator Telesp and two cell phone operators at the Telebras privatisation. But while Telefonica foresees guaranteed added shareholder value from the new acquisitions from 2001 onwards, the Brazilian units will dilute Telefonica's earnings per share over the next three years. ''Telefonica said these purchases will dilute its earnings per share by 2.0 percent in 1998, 3.8 percent in 1999 and 1.0 percent in 2000,'' said Vicente Castellano, analyst at Ibersecurities in Madrid, who took part in the conference call with Telefonica. Nonetheless, Telefonica expects to see meteoric growth from its new assets, forecasting that Telesp -- in which it controls 13.7 percent -- will see its net profit quadruple by 2002, with the number of installed telephone lines doubling to 11.07 million lines during the period. And Telefonica forecasts that the profits of Tele Sudeste Celular, in which it now controls a 14.12 percent stake, will also grow four-fold by 2002, with subscriber numbers set to rocket to 2.35 million from 980,000 at present. Telefonica is currently in negotiations with fellow investors MCI (MCIC - news), Portugal Telecom and a number of investment consortia, which are trading stakes in units purchased in the sale. Ibersecurities' Castellano said Telefonica justified the purchases in Telebras by citing the accumulated growth rates in terms of new line installations and revenues. ''It is a market they couldn't afford to stay out of,'' he said. Shares in Telefonica have dipped since the auction, with some analysts saying the Spanish operator paid over the odds for the units, which account for the lion's share of Telebras. The stock underperformed the bluechip Ibex-35 on Tuesday, gaining just 0.27 percent to 7,390 pesetas. The company is due to issue $1.5 billion dollars in floating rate notes in the eurobond market to help fund its purchase, according to sources close to the company. And earlier this year it raised 427 billion pesetas ($2.83 billion) through a capital increase aimed at funding investments in Brazil. But while Telefonica said its Telebras investments were fully covered, it gave no details on how it would fund the balance of its total investment. Telefonica is now negotiating a potential stake in former Telebras unit, fixed line operator Embratel, purchased by MCI at the auction, the Telefonica statement said, giving no further details. Analysts widely expect Telefonica to take around a 10 percent stake in Embratel. biz.yahoo.com