Portugal Telecom Sets TV Cabo IPO


Portugal Telecom S.A. has sold 6 percent of its TV Cabo
Portugal S.A. unit to private investors, and it plans to sell another portion of the pay
TV operator in a November initial public stock offering, the seller said late last month.

Portugal Telecom, the country's telco, netted about 16
billion escudos ($US94.1 million) from the sale, which would value 100 percent of TV Cabo
at 266 billion escudos ($US1.6 billion), the company said.

TV Cabo's hybrid fiber-coaxial network passes about
1.8 million of Portugal's 3.13 million TV homes, and it serves about 600,000
subscribers. It has doubled its subscriber base each year over the past three years. That
fast growth and potential led the new investors to pay a hefty $2,666 per subscriber,
based on TV Cabo's full value.

The investors include five Portuguese investment banks and
soccer-marketing company Olivedesportos S.A., which is a partner in TV Cabo's
premium-sports channels.

Over the course of the year, TV Cabo will take on other
direct investors, some of which it is already partnered with, according to Jorge Castela,
a Portugal Telecom spokesman.

"The second stage, in the first half of the year, will
be to reinforce the position of the strategic allies," he said.

Portuguese broadcaster Sociedade Independente de
Comunicacao S.A. has agreed to buy a stake in TV Cabo, and other programming partners
include Brazil's Organizaçoes Globo and Portuguese public broadcaster RTP.

The IPO will be for between 25 percent and 33 percent of TV
Cabo, Castela said. Portugal Telecom will unload a maximum of 40 percent of TV Cabo
between the direct equity sales and the IPO, he added.

"We want the financial community to visibly and
transparently see the value of Portugal Telecom as a whole and TV Cabo as a
subsidiary," Castela said.

In September, TV Cabo launched a digital direct-to-home
platform, which currently has about 12,000 subscribers, Castela said. The operator is also
in early discussions with Microsoft Corp.'s WebTV Networks unit to develop a
Portuguese version of the Internet-over-TV service, he added.

Portugal Telecom, meanwhile, is aggressively expanding its
telephony investments. In July, it bought 64.2 percent of Brazil's Telesp Celular
S.A., a cellular operator, and 23 percent of Telesp Fixa S.A., a fixed-line operator. Both
are spinoffs of formerly state-owned telco Telecomunicaçoes Brasileiras S.A.