The financial market gave a warm welcome to the formal announcement of the wireless joint venture between Portugal Telecom and Telefonica Moviles in Latin America. In Brazil, PT controls Telesp Celular and Global Telecom, while Telefonica Moviles controls Tele Sudeste, Tele Leste and CRT Celular. Telesp Celular (TSPP4) gained sharply Wednesday, October 23, closing on 3.45 Brazilian Reals. Tele Leste Celular is up 10% so far in the month and Tele Sudeste has gained more than 3%. CRT jumped 4% on Wednesday alone. Besides the subsidiaries of both groups, the joint venture is also good news for holders of shares in Tele Centro Oeste Celular and Telemig Celular, which have long been set for acquisition. ?Everyone knows it?s nearly time to ask these ladies for the next dance,? says the chief analyst with a bank that actively trades in telecoms. The Brazilian wireless market is ?heating up?, he says. ?The Portuguese and Spaniards have been galvanized by the launch of TIM?s full GSM service. They?re also well aware that Telemar?s Oi is expanding fast enough to have more than 700,000 subscribers in December.?
13 million subscribers
There?s no longer any doubt that the new entity formed by PT and Telefonica will migrate to PCS. The Spaniards ended up having to make acquisitions in order to complete their 50% stake in the new company. To the satisfaction of equity investors, this will entail a 22.56% buyback of preferred stock in Telesp Celular at 3.50 BRL per 1,000 shares. Starting with 13 million subscribers, it?s already the largest wireless operation in Latin America. Administrative and operating gains will result in major cost savings.
