01/08/2008


Why Telecom is losing space in BOVESPA?

 

The year of 2007 was good to São Paulo Stock Exchange (BOVESPA). Ibovespa had increased 43.6% and were realized 64 initial public offers of shares (IPOs), which represented capture of R$ 55.5 billions, in the year.

 

Telecom companies involved in BOVESPA are not, however, accompany this growth. The Itel, index that comprises shares of Telecom, presented a recovery of 16.1%. The market cap of the major companies in the industry grew less than 43.6% of the Ibovespa.

 

Market Cap **
R$ Billions
2006
2007
Growth
Telemig Part.
1.9
2.6
39%
BrT Part.
8.9
12.2
37%
Oi (TNL)
15.6
16.6
6%
Vivo
15.7
15.7
0%
Embratel Part.
7.0
6.8
-3%
Telesp
26.5
23.1
-13%
Tim Part.
21.4
16.0
-25%
GVT
-
4.5
75%*

**Feb to Dec/07. GVT started to have its shares negotiated in Bovespa in 02/15/2007.

**Market Cap of a company is the addition of the shares values sent to negotiation in the stock exchange of this company. (more details)

 

Even GVT, which made a successful IPO in February, showed growth of 5% of its market cap in the last 6 months.

 

Shares of telecommunications operators are losing more space between the securities traded on the São Paulo Stock Exchange (BOVESPA). The participation of the shares of telecom companies (including Net) in the composition of the index that make up Ibovespa fell from 47.8% in 2001 to 9.7% at the end of 2007.

 

Ibovespa portrays the behavior of the major stock traded on BOVESPA. Shares of its index compositionl account for more than 80% of the number of businesses in financial volume recorded in the cash market (standard lot) of BOVESPA. The participation of each stock in the composition index has direct relationship with the representative of this title in this market in terms of number of business and financial volume.

 

The participation decrease of Telecom companies in Ibovespa is related to:

  • Decreasing of the number of Telecom companies that participate of its composition index (19 stocks in 2001 against 12 stocks in 2006). This decreasing is result of companies consolidation, as in the case of Vivo, and the closing of the capital of companies by América Móvil/Telmex group, as in the case of Embratel.
  • Low performance of the stocks. The preferential share (PN) of Oi (Telemar - TNLP4) which uintil 2005 was the most negotiated share in BOVESPA decrease to the 5th position in 2006 to 15th in 2007.The attempt to corporate reorganization of Oi in 2006 and 2007 ended negatively affecting the performance of this role.

Oi tried to achieve in 2006 and 2007 a corporate reorganization with the objective of increasing the market cap of the company. The aim was to simplify the corporate structure and transform all existing shares into shares ON (ordinary), which would be negotiated in the New Market of Bovespa.

 

The proposed reorganization was not, however, accepted by shareholders owners of preferred shares that did not accept the price offered for their shares (more details).

 

BrT facing the same difficulties of Oi to make a similar corporate reorganization.

 

It is likely, however, that Oi and BrT pass, sooner or later, by a corporate reorganization as proposed by Oi. At the end of 2007, 92 from 156 companies listed on BOVESPA already were part of the New Market.

 

Oi (TNL) and Brasil Telecom (BrT Part.) are businesses in which most of the capital is in the hands of the market, largely as preferred shares (PN). The Telefonica and Telecom Italia controlling more than 60% of the shares of their companies.

 

Participation of the shareholdres

 

% Shares
ON
PN
Total
Oi (Telemar - TNL)
57.62
3.18
21.32
BrT Part.
57.09
8.41
26.34
Telemig Part.
70.11
6.91
30.41
GVT
36.05
-
36.05
NET
99.36
12.5
41.49
Vivo
89.34
47.53
62.75
Tim Part.
81.21
63.71
69.67
Telesp
85.58
89.14
87.95
Embratel Part.
98.07
97.89
97.98

 

 

According to the text above, you could ask:

  • Why are Telecom companies losing space at BOVESPA?
  • Would you invest in shares of Telecommunications companies?
  • Will Oi and BrT continue with proposed corporate reorganization in 2008?
  • Will Oi purchase BrT? Will GP and Citi sell its participations in these operators? Who are the buyers?
  • Could Oi or BrT be acquired by another international operator as Portugal Telecom?

 

 

Commentaries

 

 

To send us a commentary, click on: teleco@teleco.com.br

 

Please let us know if you authorize the publication of your commentary.

 

 

Workshop
(in portuguese)
Cellular Market Update

 

 

TELECO CONSULTANCY

Reports

Imagem cortesia FreeDigitalPhotos.net

Telecom, Cellular and Capex

Workshops

Market Update

Regulation in Brazil

Consultancy

Studies and Databases

More Products

EVENTS

More Events

REPORTS

Huawei Whitepaper

Mavam




 

 

 

 

 

Print this Page

Add to favorites Communicate errors