Further growth opportunities to be had in local operation, PT CEO says

Friday, May 27, 2011

European telecoms operator Portugal Telecom (NYSE: PT) continues to see large growth opportunities in Brazil, company CEO Zeinal Bava said during a conference call with investors.

"We continue to see Brazil as the market that offers significant growth opportunities in terms of the future, with low unemployment, [good] income growth and redistribution, and low penetration of both broadband and pay TV," the executive said.

"We're working extremely well with our partners in Brazil and with the management team of Oi," Bava added.

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In March this year, Portugal Telecom bought a 25.28% stake in Oi for 8.32bn reais (US$5.20bn). The acquisition formed part of a Portugal Telecom-Oi agreement first announced in July 2010, in which Oi aims to hold a 10% stake in the Portuguese company. Last year PT sold its 50% stake in Brazil's largest mobile operator, Vivo (NYSE: VIV), to joint venture partner Telefónica (NYSE: TEF).

"With regards to mobile, the market continues to be very competitive. But here we also believe that we can bring to them the experience we have, especially coming from Vivo, to ensure that we can enhance Oi's competitive position in this market, as well in the future," Bava added.

The executive said Oi's planned restructuring process "will bring clear benefits for the company and all of it shareholders [by] having just one representative in Brazil, eliminating five classes of shares, increasing the company's relative importance in all the stock market indices, and simplifying corporate governance."

Telemar Participações, the controlling shareholder of Oi, plans to bring together all of Oi's units in a move that looks to make the corporate structure more transparent. Under the plan, Oi units Tele Norte Leste Participações, Telemar Norte Leste, Coari Participações and Brasil Telecom are to be reorganized under a single company, Brasil Telecom, which will be renamed as Oi SA and will be the only firm listed on the São Paulo and New York stock exchanges.

PT posted a net profit of 130mn euros (US$186mn) in the first quarter of the year, an increase of 29.3% year-on-year, the telco said in its earnings statement.

Quarterly revenues reached 871mn euros, down 3.9% compared to 907mn euros in the year-ago period.

The operator's capex in Q1 totaled 122mn euros, down 25% year-on-year.