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

To: David Petty who wrote (9844)	11/18/1998 6:26:00 PM
From: Steve Fancy	Respond to of 22640

INTERVIEW-Motorola bets on lower income Brazilians Reuters, Wednesday, November 18, 1998 at 15:10 By Shasta Darlington SAO PAULO, Nov 18 (Reuters) - Brazil's telecommunications industry must start offering discounts and taking other steps to attract lower-middle income customers sooner than it had planned to keep sales booming amid an economic recession, a Motorola Inc. (NYSE:MOT) director said. "Repressed demand for communications in Brazil is so big it won't run out, but it could slow down," said Dante Iacovone, director of South America operations for the U.S. technology giant. "Growth, then, will have to depend on" selling services to lower-middle income customers, also known as 'the C Class,' he said. Sign-up fees could be cut significantly "within a year" and in the meantime telephone companies and equipment makers could ease financing requirements and offer discounts, Iacovone told Reuters on Tuesday after a press conference to launch a new Motorola plant in Brazil. Competing cellular telephone companies BCP Telecomunicacoes and Telesp Celular (SAO:TSPP4) have virtually eliminated waiting lists in Sao Paulo, already spurring aggressive advertising campaigns and deals. BCP, which is controlled by BellSouth Corp (NYSE:BLS) and started operations earlier this year, sent out a mailing with vouchers promising a 100-real discount on a cell phone with every new sign-up. "You see, it's already happening," said Iacovone. "The 'C Class' is a very interesting business in Brazil right now, and for us in particular," he said, noting that most upper- and middle-income Brazilians "already have cellular phones, so we've got to grow where there's still room." A currency devaluation in Russia earlier this year sparked a wave of capital flight from emerging markets that pushed Brazil close to a financial crisis. The government pushed up interest rates and introduced an austerity plan that should protect the value of Brazil's currency, but at the cost of an economic recession next year. Motorola is betting it can stave off a sharp drop in sales by selling equipment to "mirror" telephone companies that buy licenses at the beginning of 1999 to compete with the fixed-line companies and a long-distance operator that were spun off of Telebras and privatized. The new companies will be allowed to use a technology called "wireless local loop." (WLL). "It's like a fixed-line cellular," Iacovone explained. "It's going to mean one more source of business for us. We have a very good WLL technology." Motorola do Brasil is also charging ahead with plans to build a complete telecommunications complex in Jaguariuna, near Campinas in Sao Paulo state. Tuesday it opened its fourth Brazil plant, bringing investments in the last three years to $150 million. Motorola's Brazil unit plans to invest another $200 million over the next four years as it opens more factories to begin producing in Brazil many of the components it still imports from other plants. "We want to show that we believe in Brazil, in the good times and in the bad times," Iacovone said. Motorola, unlike its competitors Ericsson Telecomunicacoes (SAO:ERIC4) and the local unit of Japan's Nec Corp (TOKYO:6701), did not sign an exclusive equipment contract with any of the new telephone operators that grew out of Brazil's privatization process. "We don't regret anything we've done," Iacovone said. "We obviously expect a very high growth level." shasta.darlington@reuters.com)) Copyright 1998, Reuters News Service

To: David Petty who wrote (9844)	11/18/1998 6:27:00 PM
From: RockyBalboa	Respond to of 22640

I just watched the chart of the stub. Nuts. Is that irrational exuberance? A month ago, nobody would have cared about the stub.. Now some serious. Are there early favorite bra's. Still, mine are only TSP and TSP cellular for now. C.

To: David Petty who wrote (9844)	11/18/1998 6:28:00 PM
From: Steve Fancy	Respond to of 22640

Government and private views differ on Brazil debt Reuters, Wednesday, November 18, 1998 at 15:45 By Apu Sikri NEW YORK, Nov 18 (Reuters) - A schism of sorts has developed between the opinions of senior Brazilian finance officials and those of western investors and rating agencies over the country's huge domestic debt burden. "We don't see the domestic debt as a problem deserving of any creativity," Gustavo Franco, governor of Brazil's central bank, told reporters here on Tuesday. In contrast, Gabriel Rubinstein, an official at rating agency Duff & Phelps, said "Brazil's internal debt is so short-term and so expensive that it could provoke an explosion at any moment." At $300 billion and serviced partly at current short-term rates of 38 percent, Brazil may have no choice but to restructure domestic debt at lower, fixed interest rates, economists said. More than 50 percent of its domestic debt is at floating interest rates. "Brazil has too much internal debt for that system to handle," said Daniel Tillotson, head of emerging markets research at Prudential Securities. "For a public-sector financing need of that size, only the international capital markets can provide such financing on a long-term and affordable basis." But Brazil's chief central banker bristled at the suggestion that the country may at some point have to restructure domestic borrowings and refinance some of it into external debt. "This is something that has to be made very clear," Franco said on Tuesday. "There is domestic debt and then there is the issue of external debt and balance of payments and we don't mix these two areas." Brazil "never had the problem of rolling domestic debt, not even during periods of high political uncertainty," Murilo Portugal, Brazil's former Secretary of Treasury and currently a delegate to the International Monetary Fund, recently said. He was in New York this week, along with other Brazilian officials, to reassure investors about the country's planned austerity measures. But some Wall Street economists pointed out that although a large chunk of Brazil's equivalent of treasury bills are bought by mutual funds and pension funds that can invest only in assets denominated in the local currency, most Brazilian banks can and do buy bonds and other instruments denominated in dollars. "The treasury operations of Brazilian banks look at assets on a dollar basis," said Robert Gay, emerging market debt strategist at Bankers Trust Corp. "They will hold Brazilian debt only if interest rates are high enough." Many economists and investors said the current IMF program providing $41.5 billion to Brazil does not address the core problem of the country's debt level. Franco said the government may increase domestic borrowing over the short term but would stabilize debt levels as the initial phase of the IMF-monitored fiscal adjustment program gets underway. To entice banks to keep investments in local treasury bills, the government of President Fernando Henrique Cardoso is making "sure there is enough money in the banking system so they can keep buying government assets," said Michael Casey, a portfolio manager at Federated Investors. Sooner or later, "they have to find a way to restructure that debt, they cannot be in a perpetual rollover crisis," Casey said. Brazilian investors, certain of at least a managed 7.5-percent annual devaluation of the real dictated by government policy -- and expecting the depreciation to be yet greater given the high debt burden -- are demanding high returns on investments. Bankers Trust's Gay said that according to government projections, Brazil's interest rate costs work out to about 7.3 percent of gross domestic product and imply an average interest rate of about 23.3 percent next year. The forecasts reflect those made by the IMF's First Deputy Managing Director Peter Fischer on Tuesday, who said he expected short-term rates in Brazil to come down to 21 percent by the end of 1999. But even around 20 percent, interest rates would be too high to facilitate economic growth, economists said. Copyright 1998, Reuters News Service

To: David Petty who wrote (9844)	11/18/1998 6:31:00 PM
From: Steve Fancy	Respond to of 22640

Brazil shrs end up as foreigners seek blue chips Reuters, Wednesday, November 18, 1998 at 16:05 SAO PAULO, Nov 18 (Reuters) - Brazilian shares extended their gains at Wednesday's close as more foreigners betting on a brighter economic outlook returned to the market, picking up undervalued blue-chips, traders said. The benchmark Bovespa (INDEX:$BVSP.X) finished up 2.6 percent at 8,547 points, bringing the week's rise to 12 percent. The index however was still down 16 percent so far this year. "Sentiment is generally improving and foreigners are coming back," said a trader at Opportunity Capital. Traders said Tuesday's credit easing by the U.S. Federal Reserve opened room for Brazilian interest rates to fall, helping equity prices. Brazilian state electric company Cemig preferred (SAO:CMIG4) led gainers on Wednesday, rising 6.43 percent to 29.80 reais, while top-traded Telebras preferred receipt (SAO:RCTB40) rose 2.85 percent to 108.30 reais. Both issues are sought after by foreign investors. Volume on the Sao Paulo bourse was also increasing, with about $550 million worth changing hands on Wednesday. Traders said most foreign investors in Brazil were encouraged after the International Monetary Fund unveiled a $41.5 billion rescue package for Latin America's economic giant last Friday. Progress being made in Congress, where the government was anxiously trying to push through social security reforms, was also adding support, traders said. The government on Wednesday won the backing of allied political parties for a higher corporate social security levy, which was due to be voted on in Congress later today. A successful vote would pave the way for the government to save $23.5 billion next year. Copyright 1998, Reuters News Service

To: David Petty who wrote (9844)	11/18/1998 6:32:00 PM
From: Steve Fancy	Respond to of 22640

Brazil's lower house, senate okay austerity decree Reuters, Wednesday, November 18, 1998 at 17:57 BRASILIA, Nov 18 (Reuters) - Both houses of Brazil's Congress approved Wednesday a presidential decree setting rules for public sector pension plans -- a key part of the government's austerity plan, a congressional official said. The decree was the first of six the government hopes to approve Wednesday to keep up the pace of voting on its plan to cut costs and tackle the country's economic crisis.