S&P Equity Research Downgrades Tele Norte Leste Participacoes (TNE) to Sell

February 29, 2008 1:54 PM EST

S&P Equity Research downgrades Tele Norte Leste Participacoes (NYSE: TNE) from Hold to Sell.

S&P analyst, J. Moorman, says, "TNE reports '07 earnings per ADS of $2.95 vs. $1.58, $0.65 above our estimate mostly on lower interest expense. Revenue was slightly better than we expected on higher wireless growth that also resulted in EBITDA slightly better than expected. However, we believe the launch of new markets and licenses in '08 could reduce margins and are lowering our EBITDA margin estimate to 34.3% from 35.7%. We are reducing our '08 earnings per ADS estimate by $0.03 to $2.48, as lower interest expense offsets part of the EBITDA reduction. We reduce our 12-month target price by $1 to $22."

Tele Norte Leste Participacoes SA (Tele Norte Leste Holding Company (TNL)) is a telecommunications services provider in Region I of Brazil, offering an integrated communications product portfolio that includes traditional fixed-line, mobile, broadband, Internet service provider (ISP) and other services to residences, consumers, small, midsize and large business users, and government entities.

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