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:
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:
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