Portugal Telecom Announces Its Intention to Launch an Exchange Offer for 100% of the Outstanding Telesp Celular Participacoes Shares and ADRs in Exchange for Portugal Telecom Shares.Business Editors LISBON, Portugal--(BUSINESS WIRE)--May 21, 2001 Portugal Telecom Portugal Telecom (Euronext: PTC, NYSE: PT) is the biggest telecommunications operator in Portugal. It operates mainly in Portugal and Brazil. It also has a significant presence in Morocco, Guinea-Bissau, Cape Verde, Mozambique, Timor-Leste, Angola, Kenya, the People's Republic , SGPS SGPS Sociedade Gestora de Participações Sociais , S.A. ("Portugal Telecom"), Portugal's leading telecommunications company See telecom company. , announced today its intention to launch an offer to exchange Portugal Telecom ordinary shares for the outstanding shares in its Brazilian mobile subsidiary Telesp Celular Participacoes S.A. ("Telesp Celular"), not already held by Portugal Telecom (representing 58.8% of Telesp Celular's share capital). The Telesp Celular shares comprise a combination of ordinary (ON) and preferred (PN) shares traded in Brazil, and American Depositary Receipts American Depositary Receipt (ADR) Certificates issued by a US depository bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. (ADRs) traded in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Highlights - Significant reinforcement of the Group's mobile activities. Over the past several years, the Portugal Telecom Group has increasingly focused on high-growth business sectors, including mobile. On a pro forma basis reflecting the proposed offer, the proportionate contributions to the Group's revenues and EBITDA from mobile operations would have increased from approximately 35% to 45% in the first quarter of 2001. - Consolidation of position in a key growth market. With 160 million inhabitants and low cellular penetration compared to Europe, the Brazilian cellular market offers substantial growth potential. The proposed transaction strengthens the Group's position in this key market and substantially enhances its growth profile in mobile. - Increased ownership of an acknowledged market leader. Telesp Celular is the leading cellular operator in the state of Sao Paulo, Brazil's wealthiest state. The proposed offer will enhance Portugal Telecom's ability to capture the full value of Telesp Celular's leading position in this premier telecommunications market. - Provide to non-controlling shareholders of Telesp Celular a premium and the opportunity to benefit from all of Portugal Telecom's businesses. Portugal Telecom is offering Telesp Celular's minority shareholders a premium over the current market price of Telesp Celular shares. Portugal Telecom is also offering them the opportunity to become shareholders in a telecommunications operator that is well-positioned within the key mobile, data and multimedia segments - and the clear leader in the Portuguese-speaking world. - Strengthen Portugal Telecom's mobile joint venture with Telefonica - Brazil's largest mobile operator. The proposed transaction will further strengthen Portugal Telecom's and Telefonica's announced mobile joint venture in Brazil, which will have over 9.3 million subscribers and will operate across five regions which, together, generate over 70% of Brazil's gross domestic product. - Streamline Telesp Celular's capital structure. Portugal Telecom has been committed to Telesp Celular since its privatisation in 1998. The proposed offer represents the final step in the streamlining of Telesp Celular's capital structure. The Proposed Exchange Offer Portugal Telecom intends to acquire the remaining 245.4 billion Telesp Celular preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. (60.5% of which are represented by ADRs) and 23.9 billion ordinary shares that it does not currently own. These represent, in aggregate, 82.3% of Telesp Celular's outstanding preferred shares and 14.9% of its outstanding ordinary shares. The proposed exchange ratios relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the offer by Portugal Telecom are as follows: - 0.852 ordinary shares of Portugal Telecom for every 1,000 ordinary shares of Telesp Celular - 0.949 ordinary shares of Portugal Telecom for every 1,000 preferred shares of Telesp Celular - 2.333 ADRs of Portugal Telecom(1) for every ADR ADR - Astra Digital Radio of Telesp Celular(2) (1) 1 ADR = 1 Ordinary Share (2) 1 ADR = 2,500 Preferred Shares The exchange ratio for all classes of securities set out above imply a premium of 40% over the average market closing prices of Telesp Celular securities over the last five trading days. Portugal Telecom intends to apply for a listing of its ordinary shares on the Sao Paulo Stock Exchange Sao Paulo Stock Exchange See: Bolsa de Valores de Sao Paulo - BOVESPA See Bolsa de Valores de Sao Paulo. through the issuance of Brazilian Depositary Receipts depositary receipt A negotiable certificate that represents a company's publicly traded debt or equity. Depositary receipts are created when a company's shares or bonds are delivered to a depositary's custodian bank, which instructs the depositary to issue (BDRs). Arrangements will be made to issue BDRs and ADRs representing Portugal Telecom shares in relevant markets. Timing of the Proposed Offer Any offer will only be made pursuant to the filing and approval of the relevant offer documentation, including a prospectus for the Portugal Telecom shares to be offered. The offer prospectus and additional offer documentation will be submitted to the Brazilian Comissao de Valores Mobiliarios (CVM) and the U.S. Securities and Exchange Commission (SEC) for their review and approval as soon as practicable. Portugal Telecom also intends to submit the documentation necessary to list its shares on the BOVESPA in the form of BDRs. The offer will be subject to certain terms and conditions which will be included in the formal offer documentation, including the approval of Portugal Telecom's shareholders and the necessary authorizations of the CVM, the Brazilian Central Bank and the SEC. Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. and Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. are acting as financial co-advisors to Portugal Telecom in connection with this transaction. This press release contains forward-looking statements. Such statements are not statements of historical fact and reflect goals of the company's management. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects," "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, the results of operations of the company to be achieved may be different from the company's current goals, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update them in light of new information or future developments. Investors and security holders are strongly advised to read both the exchange offer prospectus and the solicitation/recommendation statement regarding the exchange offer referred to in this press release, when they become available, because they will contain important information. The exchange offer prospectus will be filed by Portugal Telecom, with the SEC and the CVM. The solicitation/recommendation statement will be filed by Telesp Celular with the SEC. Investors and security holders may obtain a free copy of these statements when available and other documents filed by Portugal Telecom and Telesp Celular by contacting the SEC. The exchange offer prospectus and related materials may be obtained for free by directing such requests to Portugal Telecom. The solicitation/recommendation statement and such other documents may be obtained for free by directing such requests to Telesp Celular. Portugal Telecom is listed on the Lisbon and Oporto and New York Stock Exchanges New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and traded on London SEAQ SEAQ See: Stock Exchange Automated Quotation System International. Information may be accessed on the Reuters 2000 Service under the symbols PT and PTCO.IN, on Bloomberg under the symbol PLTM PL and on Quotron under the symbol PT. Telesp Celular' Ordinary and Preferred shares trade on the BOVESPA and its ADRs, each equal to 2,500 preferred shares, trade on the New York Stock Exchange. Information may be accessed on Bloomberg under the symbol TCP (1) (Transmission Control Protocol) The reliable transport protocol within the TCP/IP protocol suite. TCP ensures that all data arrive accurately and 100% intact at the other end. and on the Reuters 2000 Service under the symbols TSPP TSPP Tetrasodium Pyrophosphate TSPP tetrakis(4-sulfophenyl)porphine 3.SA and TSPP4.SA This communication does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. About Telesp Celular Telesp Celular is the leading provider of cellular services in the state of Sao Paulo, operating through its 100% owned subsidiary, Telesp Celular S.A. The state of Sao Paulo is the wealthiest state in Brazil, with a per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. GDP GDP (guanosine diphosphate): see guanine. that is approximately twice the country's average, and has a population of nearly 37 million inhabitants
The game is based loosely on the concepts from SameGame. , representing around 22% of Brazil's population. As of March 31, 2001, Telesp Celular had a subscriber base of 4.5 million subscribers, a 47% increase over the same period last year and representing a market share of 64% of cellular subscribers in the state. Net subscriber additions in the first quarter of 2001 were 0.2 million, corresponding to a 64% share of all net subscriber additions in the state during that period. Additionally, in January 2001, Telesp Celular acquired an approximately 83% indirect economic interest in Global Telecom S.A. (with an option to buy the remaining 17% upon regulatory approval). Global Telecom is the B Band cellular telephony operator in the states of Parana and Santa Catarina Santa Catarina (sän`tə kətərē`nə), state (1996 pop. 4,865,090), 37,060 sq mi (95,985 sq km), S Brazil. The capital is Florianópolis. , an area contiguous to the state of Sao Paulo with a combined population of 15 million inhabitants. Both states are among the wealthiest in Brazil and have a low wireless penetration of around 13%. As of March 31, 2001, Global Telecom provided services to approximately 540,000 subscribers. In the first quarter of 2001, Telesp Celular's net revenues totalled R$676.4 million ((euros)364 million) (an increase of 0.3% over the same period last year), with an EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of R$229 million ((euros)124 million) (a 6% increase over the same period last year) and a loss of R$100 million ((euros)54 million) (versus a profit of R$36 million or (euros))19 million in the same period last year). About Portugal Telecom Portugal Telecom is the largest operator of fixed line telephony services in Portugal, providing 4.3 million main lines to subscribers, as well as 0.7 million ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. equivalent lines at the end of 2000. Portugal Telecom's 100% owned subsidiary, TMN (Telecommunications Management Network) A set of international standards for network management from the ITU. It is used by large carriers such as Sprint, Verizon and AT&T. , is the largest mobile telecommunications provider in Portugal with more than 3.1 million subcribers, representing a 44% share of the total Portuguese mobile market as of March 31, 2001. Portugal Telecom is also the leading provider of IP/data services to business customers in Portugal through its PT Prime subsidiary. Through its publicly traded subsidiary PT Multimedia (63.59% ownership by Portugal Telecom), Portugal Telecom operates the leading cable and DTH (Direct-To-Home) Typically refers to satellite TV broadcasting directly to a dish antenna on the roof of a house. See DBS. TV service provider in Portugal (pay-TV customers surpassed 1 million as of March 31, 2001, a 25% increase over the same period last year). Through its listed subsidiary PT Multimedia.com, PT Multimedia operates the leading ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. and the leading portal (www.sapo.pt) in Portugal and is completing the acquisition of an 18% stake in the leading ISP and Portal in Brazil (www.uol.com.br). Portugal Telecom owns indirectly 43.2% of PT Multimedia.com. PT Multimedia also owns Lusomundo, one of the largest Portuguese media and entertainment groups, and a minority interest in Paginas Amarelas, Portugal's leading yellow pages telephone directory business. Through Lusomundo PT Multimedia holds a broad portfolio of businesses within the media and entertainment industry, including 150 cinema screens across Portugal and Spain, the Blockbuster video network in Portugal, the first and third leading newspapers in Portugal Below is a list of newspapers published in Portugal. Dailies
For the first quarter 2001, Portugal Telecom recorded operating revenues of (euros)1,376 million ((euros)1,165 million with Telesp Celular proportionally consolidated) and EBITDA of (euros)525 million ((euros)452 million with Telesp Celular proportionally consolidated), representing a margin of 38.1% (38.8% with Telesp proportionally consolidated), and net profit of (euros)133 million. In accordance with Portuguese GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , from January 1, 2000, Portugal Telecom now fully consolidates Telesp Celular's financial results with its consolidated financial results. Prior to January 2000, Portugal Telecom had proportionately consolidated Telesp Celular's financial results. Appendices Appendix I - Abridged Telesp Celular Participacoes' financial statements Appendix II - Abridged Portugal Telecom financial statements Appendix III - Proforma Portugal Telecom consolidated operating revenues by business line Appendix IV - Proforma Portugal Telecom consolidated EBITDA by business line This information is also available on Portugal Telecom's website at www.telecom.pt Portugal Telecom will host a conference call for investors and analysts today, May 21, 2001 to discuss its proposed offer for the outstanding shares of Telesp Celular. Time: 4.00 pm (UK)/5.00 pm (Continent)/11.00 am (Eastern). Host: Zeinal Bava, Chief Financial Officer DIAL-IN FROM US: 800 289 0518 OR 913 981 5532 DIAL-IN FROM UK: 0800 027 1111 DIAL-IN FROM CONTINENTAL EUROPE Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. : +44 8700 559 384 For further information please contact Anne Beevers at Taylor Rafferty London on +44 20 7936 0400 or Colin Pritchard of Taylor Rafferty NY on (212)889-4350. For tabular information please contact Taylor Rafferty. |
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