Entel Jumps in Chile as JPMorgan Says Peru Beating Undue

Empresa Nacional de Telecomunicaciones SA, Chile’s second-largest wireless operator, rose the most in six months after JPMorgan Chase & Co. said it offers faster growth than competitors at an attractive price.

The shares advanced 5.1 percent to 6,530 pesos at 4:30 p.m. in Santiago, the most since Sept. 23. It was the best performer on the benchmark IPSA index, which rose 1.3 percent.

JPMorgan raised its recommendation on Entel to the equivalent of buy from neutral. The company’s earnings before interest, taxes, depreciation and amortization will climb at an average annual rate of 9 percent through 2018, compared with 6 percent for Tim Participacoes SA and 1 percent for America Movil SAB, according to analysts at the New York-based bank.

“Current valuations do not reflect Entel’s superior growth profile,” analysts Andre Baggio and Marcelo Santos wrote in a report dated today.

The stock price is 10.3 times its trailing 12 months of earnings, versus an average 15.7 times for regional peers, according to data compiled by Bloomberg.

Entel’s shares have lost 33 percent since April 4, when Entel said it would pay $400 million for Nextel Peru, a unit of NII Holdings Inc. The IPSA fell 17 percent in the same span.

Nextel Peru had a loss before interest, tax, depreciation and amortization of $36 million in 2012, according to an April 4 report from JPMorgan.

“We believe investors overreacted to this acquisition, and that Entel is a compelling stock,” the analysts wrote.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Bradley Keoun, Richard Richtmyer

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