Will Red, White and Blue Buffett Answer Call of Brazil’s Baby Bells?

The breakup of Brazil’s equivalent of Ma Bell is imminent, and investors are lining up to bid for the pieces.

Is Warren Buffett in that lineup?

Opportunity Capital Partners, one of Brazil’s biggest money managers, said it has approached the American billionaire about making a joint bid for one or more of the telephone companies to be sold in July as part of the $20-billion breakup of Telecomunicacoes Brasileiras, or Telebras for short.

“We’ve been to Nebraska,” said Daniela Maluf, head of investor relations at Opportunity’s private equity arm, in reference to the Omaha headquarters of Buffett’s holding company, Berkshire Hathaway Inc. Maluf said Opportunity is waiting for a reply.

Marc Hamburg, Berkshire’s treasurer, declined to comment.

Just because he was shown an investment proposal hardly means that Buffett would be a buyer, of course. Berkshire receives untold numbers of investment proposals every year.

What’s more, investing in Telebras would be unusual for Buffett because it is a foreign company. Buffett has the bulk of his investments in U.S. stocks.

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Still, Buffett told reporters this month he’s willing to buy non-U.S. stocks. “We’ve always looked internationally,” he said at Berkshire’s annual meeting. “We haven’t found a lot, but anything that we think we can understand and where we think we can get a lot for our money, we’re willing to do.”

Groups of investors, such as the one Opportunity is trying to cobble together, are scrambling to assemble bids for the 12 companies formed by the breakup of Telebras: three fixed-line operators, one long-distance provider and eight cellular phone companies.

The government hopes to sell its controlling stakes in those companies. On Thursday, the Telebras auctions, which had been scheduled for July 15, were pushed back to July 29.

The current public minority owners of Telebras will receive one share in each of the 12 companies for each Telebras share now owned. The 12 units are then expected to trade separately in Brazil as well as the United States. The New York Stock Exchange and the Nasdaq Stock Market are in heated competition to trade those units.

Telebras shares now trade on the NYSE. They closed at $109.75 Thursday, sharply below last year’s peak of $169.25. What is the stock worth on a breakup basis? Good question. Earlier this year some analysts said the stock could easily hit $170 before the breakup. But with rising worries about Brazil’s economy, investors are balking at paying up for Telebras, despite the hot growth prospects of at least some of its units.

Another complication: The split-up will be taxable to U.S. owners of Telebras, meaning it carries the potential for a capital-gains tax bill.

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Brazil’s Ma Bell

Telebras, the Brazilian telecommunications monopoly, will be busted into 12 pieces in July under the government’s privatization plan. But Telebras stock, after soaring to a record $169.25 last year, has fallen as enthusiasm over Latin American economies has waned. Monthly closes on the New York Stock Exchange, and latest:

Thursday close: $109.75

Source: Bloomberg News