Equity analysts in Brazil acknowledge the impossibility of reliably forecasting what will happen to Embratel. Investors apparently feel the same, judging from the exceptional volatility of the long-distance carrier?s main stock (EBTB4). It had gained 9% at one time Wednesday, July 17, but ended the session down 0.64% on the day at 1.55 reals. News that WorldCom had almost wrung an agreement from 25 banks to refinance part of its debt did little to dispel fears of bankruptcy because of a dispute over preferential treatment for bondholders over banks.
Market cap dwindles to 180-200m USD
On the home front, Embratel?s situation remains nebulous. Communications Minister Juarez Quadros says the carrier won?t go broke in six months if the rules on accounting rates are left as they stand. However, everyone recognizes that Embratel can?t hope to expand unless there are changes in the status quo. Its stock price has fallen 84.24% so far this year, reducing market cap to 521 million reals, in the range of 180m-200m US dollars at the current exchange rate. ?It really is very cheap,? said one analyst consulted by TELETIME News. ?But there?s nothing to prevent the stock from dropping even further and becoming worthless, despite Embratel?s massive infrastructure and strong market presence, as noted by Minister Quadros.? The next wave of market jitters about Embratel is expected to hit on Tuesday, July 23, when management will announce second-quarter financials.