We highlight the following stocks: Telefonica (TEF), Telemig (TMB), Vivo (VIV) and Telesp (TSP).

Yesterday it was announced that Brazilian industrial production declined in December 2008 12.4% from November and 14.5% from December 2007. Those numbers were worse than expected, and reflects the huge impact of the crisis in an economy that was growing almost 7% per year.

For January 2009 there are some positive signs, as car sales are growing again and consumer confidence remains up. Inventories declined very fast in the end of 2008, thus some recovery is expected for the beginning of 2009.

Despite those negative numbers, confidence is still up among consumers and corporations. Also yesterday, Spanish Telefonica (TEF) announced it will increase investments in Brazil by 20% in 2009 to BRL2.4 billion or US$1.04 billion. Mr. Antonio Valente, CEO of Telefonica in Brazil, still expects economic growth of 2% in 2009 and understands that the wireless business will not be that much affected by the crisis.

Latin America is responsible for around 30% of TEF's revenues and just Brazil represents 16% of the company's total revenues. Fourth quarter growth in the Brazilian wireless market gives some reason for optimism. Despite the difficult business environment, the Brazilian wireless market increased by 7% quarter-over-quarter in the fourth quarter 2008, reaching 150.6 million subscribers. It seems that the crisis did not reached the wireless market in Brazil...

Of course some negative impact will be unavoidable in the following months. Nevertheless, we still have a positive view and a Buy recommendation on the companies controlled by Spanish Telefonica in Brazil, like Telemig (TMB), Vivo (VIV) and Telesp (TSP).