Telebras FAQs

Answers to Frequently Asked Questions:

Why did TBR's share price drop from a high of $135 to pennies?

See the breakup of Telebras into 12 new companies, plus the Brazilian currency's 40% slide in January 1999.

Will TBR be like AT&T after their breakup in the 1970's, and recover to pre-split prices?

The answer to that is a resounding "NO!" Compare and contrast the stories of the two breakups.

AT&T from An Outline of the American Economy
Anti-monopoly efforts will long be measured against the Justice Department's success in forcing the breakup of American Telephone and Telegraph Co. (AT&T), the world's largest and most prosperous telecommunications network. In 1974 the Justice Department sued AT&T for attempting to monopolize the telephone industry. In 1982 an agreement was announced whereby AT&T would divest itself of its 22 local operating companies, effective January 1, 1984. AT&T was allowed to retain the Western Electric Company (its manufacturing subsidiary), the Bell Telephone Laboratories (its research subsidiary) and its long-distance telephone business. In addition, it was allowed to expand into previously prohibited areas including data processing, telephone and computer equipment sales and computer communication devices. AT&T rapidly moved into the computer business; after some halting and mostly unsuccessful efforts, in 1991 it took over NCR Corp., one of the major American computer companies.
As a demonstration of the vigorous enforcement of U.S. antitrust laws and the effort to safeguard competition, the AT&T breakup was an unqualified success. Although AT&T continued to have about two-thirds of the long-distance telephone market in the early 1990s, it no longer held a monopoly.

Telebras (TBR) from shareholder information statement
In connection with the Breakup, Telebra´s has ceased to engage in its historic business activities and the Federal Government, Telebra´s’ controlling shareholder, has announced its intention to cause the dissolution of Telebra´s. The Minister of Communications has enacted an ordinance providing that a liquidation plan for Telebra´s be prepared and submitted for approval at a shareholders’ meeting to be convened for this purpose. It is expected that upon shareholder approval of the dissolution and liquidation of Telebra´s, Telebra´s ADSs will be delisted from the NYSE.

What about the rumors of a big Spanish telecommunications company being interested in TBR?

Well, it was a rumor a year ago. Telefónica of Spain WAS interested in Telebras, and led a consortium which included Portugal Telecom to purchase the fixed-line business of the Sao Paulo state from Telebras for $4.59 billion back in July 1998. So that has nothing to do with today's TBR.

What about the rumors of an MCI deal?

Once again, that's ancient history. MCI won the bid for the long-distance carrier Embratel (EMT) in that same auction, in July 1998.

What's this I hear about TBR possibly dissolving?

When the Brazilian government privitized and split up Telebras in 1998, it also announced plans to liquidate the shell of TBR in late 1999. You can find information about this on pages 7-8 of the information statement. It's a good source of information for shareholders about the recent history of this company.