It was a day full of nerves. Without disguising his apprehension, Marcio Lopes Almeida, financial and Investor Relations director at the Electrical Energy Transmission Company of São Paulo (CTEEP), kept one eye on the screen and, when the tension would allow, the other on the speaker. “My God, they hit the circuit breaker”, he impulsively lets out, referring to the stock exchange’s protection mechanism where trading is suspended for half an hour when the Ibovespa falls 10%.

Despite the bad news emerging hour after hour from all over the world, life was not bad at all for CTEEP; far from it, in fact. It is true that the company’s shares were down 6% on that day, but if it was any consolation, shares in the normally powerful Vale were down 12%. During the past six months, CTEEP’s shares performed enviably, at a consistently growing price and volume. Such a good performance made the company a highlighted uptrend in the Magnifying Glass section, which tracks the ups and downs of the Brazilian capital market.

Among electricity companies, especially in the transmission field, CTEEP has a curious and, until proven otherwise, successful history. The company is an offshoot of the São Paulo Energy Company (Cesp). CTEEP was established in 1999 and, in 2006, it was turned over to private initiative. Or rather, it was something like that. The company was privatized in June 2006 and had its control purchased by the ISA group – Interconexión Eléctrica S.A., a Bolivian government-owned company.

The largest transmission company in Latin America – with 37,000 kilometers of high-voltage lines in Colombia, Peru, and Bolivia – showed a voracious appetite and kicked the other five candidates to the acquisition of CTEEP to the curb. They paid a 58% premium over the minimum price of R$ 24.11 per share of one thousand stocks and got 50.1% of the São Paulo government’s ordinary shares, signing a check amounting to R$ 1.19 billion. “For several years we have dreamt of acting in Brazil”, ISA vice-president, Cezar Ramirez, celebrated on that 2006 afternoon.

Since the bid, that dream began to materialize. The company’s shares, quoted at R$ 14.36 on the month of the privatization, reached R$ 55 last August. It followed the turn in the market, falling to R$ 40, but recovered and closed September at R$ 49. Its financial health and vitality is mirrored in the latest balance sheets. Last year, profits expanded by 626.4%, as compared to the previous year, adding up to R$ 855 million. Gross operational revenue rose 11.6%, to R$ 1.5 billion, and the Ebitda margin advanced 85.8%, to R$ 1.12 billion. The shareholders received a special gift: 76.3% of last year’s profits were shared.

What is the company’s secret? “CTEEP was a little chubby”, jokes the financial director, still attentive to the jostles of that infernal day. The shock brought on by the new administration can be felt in the drastic cost reduction: 69%, to R$ 359 million, compared to R$ 1.1 billion in 2006. CTEEP reduced its personnel expenses by 86%. There were 2,412 employees. Now, they are 1,290. To the cut in personnel was added an investment in productivity growth and, obviously, a search for cheap money to pay for all the housekeeping.

Under the command of a new investor – and far away from the State’s ties –, CTEEP was able to improve its capital structure. They wanted money to carry out system improvements, reinforcements, transmission system modernizations, and new projects, which are part of the 2006-2008 investment plan. They walked out of the fomentation bank with a full plate: they got a R$ 764.2 million loan, with final maturity in 2015 and interest tied to the TJLP. The total amount corresponds to 70% of the total investment to be made by the company. Up until now, R$ 602.2 million have already been paid out.

In September, a new batch of cheap funding: CTEEP received a R$ 329 million credit approval from BNDES. The resource includes approximately 80 projects authorized by Aneel, the agency that regulates the sector, for modernization of the electricity transmission system, reinforcements, and implementation of new projects.

CTEEP transmits almost all of the energy consumed in the State of São Paulo, 30% of all the energy produced in Brazil, and 60% of the electricity consumed in the Southeast of the country. In June, at Aneel’s electrical transmission bidding, they walked away with the biggest share of allotments. They took five of twelve offered, investing a total of R$ 320 million.

Now, they are looking to get even bigger. The company is preparing to fight for (and walk away with) some transmission line allotments that will transport the energy generated by the two hydroelectric plants on Madeira River, Santo Antônio and Jirau. The expected investments may reach R$ 7 billion and, due to the size of the enterprise, the government will divide the line into seven allotments. CTEEP is expected to be one of the largest investors, with or without a consortium. “We’re going all out”, warns Almeida.