Tele Norte Leste Participacoes SA (ADR) (NYSE:TNE)

People need their cell phone and internet. Brazil is a growth market and this stock has been beaten down. Great value.

Super dividend yield, modest P/E, and an uncertain growth rate ... it's not quite a no-brainer, but I suspect the odds favor a pop in this stock, sooner rather than later.

I think the stock price will go up as the merger gets closer.

Once Olympics start in Brazil take some profit and play with the houses money.

brazil,attractive dividend---

Brazillian REAL will increase against the dollar. Brazil has some cell phone growth left. (even if they were at 90% penetration, Finland and Italy are better examples of saturated markets and are both well above 100%, meaning they have more cell phones than people). That said, I'm nervous about this pick since Brazil has several cell phone companies and competion is tight.

i know 1st

Stable growth in a growing economy with a favorable exchange rate to US. The real is going to continue regaining ground vs. the dollar, combined with the exit from the global down-turn, and the rising middle-class in Brazil, this is a stock to own for the nex 2-3 years.

Excellent cash on hand and infrastructure.

Cash per share = $15.98

Last price = $14.39

Good Feeling

"All we need is just a little patience."

`Axl Rose.

Landline, broadband, and wireless in a growing market. Second largest wireless service in Brazil. As a Brazilian company, it has a home field advantage against the likes of VIV (a subsidiary of AMX), PT, TI, and TEF. Great dividends.

Graham formula gives me a fair value of $29 when using current numbers (earnings of $2.67 and book value of $14.01). When using pessimistic earning of $1.55, I still get a fair value of $22. That's a margin of safety between 25 and 40%.

The company also pays out a nice (if variable) dividend. I am increasing my timeframe for the stock.

Telemar’s (TNE) acquisition of Brasil Telecom (BRP) remains the main trigger for both stocks. TNE’s management remains confident that the deal will go through on time. Even if this is not the case, we believe that the R$490mn fine could be renegotiated, since both parties appear to be very enthusiastic to see the deal closed.

Outlook

As an integrated telecom operator offering fixed telephony, mobile services, broadband connection and internet services, TNE could benefit from upcoming regulatory changes that would favor the wireline companies in Brazil, including the offer of triple (and quadruple) play services and potential mergers in the sector. Prospects of consolidation added to an attractive valuation support our Buy recommendation.

Valuation

We assume 3% growth for the mobile business, in line with Brazil's long-term GDP growth. We also assume 1% growth for the wireline business, as it grows at slower pace than the mobile. Our 1.6% assumption is an average weighted by EBITDA contribution (from each of these businesses) by 2015

Risk

The main risks we see for TNE are: 1) regulatory changes, including minimum targets and methodology for tariff increase; 2) increasing competition, not only from mobile operators, but also from new technologies (squeezing margins); 3) deterioration of macro-economic conditions, with a negative impact on consumption of telecom services; 4) restructuring risk, as TNE has a complex capital structure with different classes of shares.

Brazil seems to be a good market to be in rt. now. With the rule change in telecomunications, this co. is going to spread out some. It may find stiffer competition in line phones, But being home grown might give it a slight advantage.

Brazilian telecom still looks to have strong growth at a fraction of the price.

Awesome!

Goverment love in a ultra growing economy. Long term profit potential. Undervalued relative to profit and long term potential. Cons,stiff competitors and a slowing global economy. Long term story is compelling enough for me.

O/U 72