Probable acquisition drives up Embratel stock price

Embratel continued to claw back positive territory on the Brazilian and U.S. stock markets Wednesday, August 21, in response to strong expectations that a buyer will soon appear for the incumbent long-distance carrier. The main security traded on the São Paulo Stock Exchange (Bovespa) closed up 4.62% on 1.81 Brazilian Reals, for a five-day gain of 11.7%. In the U.S. the ADR was priced at $0.57 (equivalent to 1.76 BRL) toward the end of the session, for a gain of 3.64%. Some analysts believe Embratel, with a market cap of under 600 million BRL and assets worth more than 5.2bn BRL, will enhance its value if it starts delivering local telephone service immediately. This depends mainly on an understanding with Net so that the long-distance carrier can use the MSO?s cable network for the last mile. They also say AT&T Latin America is the strongest prospective bidder, having won the right to operate fixed-line telephone service under a Brazilian STFC license.

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