Deutsche Bank Downgrades Brasil Telecom (BRP) to Hold
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Deutsche Bank downgrades Brasil Telecom (NYSE: BRP) from Buy to Hold.
The downgrade is based upon the following reasons: "1) The stock has done very well recently and is up 21% in the last four weeks. 2) Besides low upside to our fundamental value, BRP looks more expensive than Tele Norte Leste Participacoes (NYSE: TNE) on multiples, trading at 4.1x on both FV/EBITDA '08 and P/CE'08 basis. 3) Telemar has been buying BRP PN shares in the market (fueling the share price increase recently). 4) BRP has been slowing down its investments in new projects, waiting for the deal with TNE to go through. 5) BRP's 1Q08 ARPU was well below our expectations and the management recently suggested that ARPU should remain weak in 2Q due to aggressive Mother's Day promotions."
Brasil Telecom Participacoes provides fixed-line telecommunications services in Brazil.
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