Tele Norte Pullback Presents Opportunity

The current 20% pullback on the heels of an unjustified S&P downgrade presents a tremendous buying opportunity in Tele Norte (TNE).

The reasoning behind S&P's decision is TNE's recent acquisition of Brasil Telecom Participacoes (BRP). BRP just announced stellar quarterly results in which earnings grew by 50%+ year over year. Since this acquisition will allow TNE to gain a strong national foothold and allow it to compete against regional rivals such as America Movil (AMX) this acquisition makes perfect strategic sense. Once the synergies from this deal and competitive advantages from this deal become more apparent, it will be considered a steal.

The recent pullback presents investors with an a great opportunity to buy one of the most undervalued global telecom names (6.5 times earings vs 10 P/E for peers) with exposure to an emerging economy such as Brazil. I suggest not being narrow-minded and allowing S&P's shortsighted comments deter you from making an investment; this stock is already trading at a significant discount to its peers and should blow away earnings on May 2nd.

Any acquisition that allow a firm to gain a virtual monopoly position in its market should be applauded by shareholders.

Comments

[rexquondamr...:]

It amazes me that Yahoo even uses SA content. The articles are poorly written, poorly researched, ridden with grammatical errors and the charts are often mislabeled. It reads and looks as though it were an 8th grade class project.

2008 Apr 29 11:17 PM

[Stockpicker...:]

Mr Pelusin,

"Are you stupidor, just retard?"- I would like to congratulate you on your sophisticated command of the English language. I will not stoop down to this level.

As may well know, any acquisition presents risks and opportunities; TNE buying BRP is no different. Nevertheless, with TNE trading at a 20% discount to all of its peers, namely 7 times earnings coupled with a 25% growth rate...the potential dilutive impact from the acquisition has already been more than priced in.

I would like to thank you for posting your two very insightful comments as your language betrays the kind of low level individual you are and would prevent any sane investor from taking you seriously.

Thanks

2008 May 06 02:58 PM

[Stockpicker...:]

Mr rexquondamrexqu,

Instead of complaining, I suggest you publish your own ideas or comments; words are cheap, actions are not. Seeking alpha is a great resource to share ideas; some grammatical errors are inconsequential as long as the articles get the point across. Investors have the power to choose whether to respect the authors opinions.

Thanks

2008 May 06 03:01 PM