Two years on, Brazil phone sell-off powers
revolution
Reuters Company News - July 28, 2000 16:51
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By Katherine Baldwin
SAO PAULO, July 28 (Reuters) - Jose Ricardo de Lima takes a break from
selling 1.50 reais boxes ($0.85) of strawberries on a street corner in sprawling
Sao Paulo to call one of his fruit suppliers on his mobile phone.
Mobile phone? Two years ago De Lima only dreamed of owning any telephone
-- fixed or mobile. Today he is one of millions of street sellers, plumbers,
mechanics or students who have been wired since Brazil sold off its stodgy
telephone monopoly for $19 billion two years ago, opening the floodgates to
competitors.
"Now phones are for everybody, not just the chosen few," De Lima said,
adding that his mobile makes stocking up on passion fruit, mangoes or bananas
a breeze.
Despite complaints about crashed lines, billing mix-ups and installation delays
that have kept some people waiting for basic telephone service for a year or
more, many agree that telecommunications in Latin America's No. 1 economy
have taken a giant leap since 1998.
"Brazil's got to where it is now after being 10 years behind everywhere else,"
says Ronald Aitken, a telecom analyst at Warburg Dillon Read in New York.
"It's catching up, if not reaching the same levels of other countries."
Competitors, led by European giants like Telefonica of Spain and Portugal
Telecom , have nourished growth of 47 percent in fixed lines since 1998, while
the number of cell phones has almost tripled in two years to 18.5 million.
Before state-owned Telebras was carved up and sold off in Latin America's
biggest ever privatisation, only eight in 100 Brazilians even had a telephone line.
And in the early 1990s, telephone lines cost as much as $5,000 on the black
market, which was the only place many Brazilians could hope to get connected.
Now new rivals are wiring up Brazil's remote coastlines and Amazonian
outposts, albeit slowly.
"It's too aggressive to say there are phones everywhere," said Luis Mann, a
telecoms analyst at Fleming Graphus in Sao Paulo. But penetration is close to
20 percent in some regions, he added.
That is helping to put this country of 166 million in a leading position in the
global technology race, analysts say. Brazil is the fastest-growing Internet
market in Latin America, where Net use is expected to grow 67 percent this
year, the fastest in the world, says research group Chase H&Q.
New competitors are dazzling youngsters with the latest mobile Internet gadgets
and telecoms regulator Anatel has already laid the foundations for the easy
introduction of faster, mobile Internet technologies. BEYOND THE
BACK-PATTING
Competition has cut the official price of a fixed-line in Sao Paulo down to 77
reais and, on the black market, the price has dropped to about 400 reais.
Many pirate phone line operators have gone bust, said a spokesman at
Telefonica's Brazil unit, which operates the fixed-line company in Sao Paulo.
But congratulatory back-patting aside, Telefonica still has a backlog of 2.5
million people waiting for a phone line after reducing the waiting list from 6
million in 1998.
And last week, Anatel began investigating 1,724 alleged service slip-ups after
auditing 38 phone companies. Consumers were overcharged, cut off and kept
waiting, the audits showed.
But analysts say these headaches are par for the course, particularly with
low-end products like prepaid cellulars. Brazil now has more prepaid phones
than postpaid, but the analysts point to public telephones and international
services as areas were progress has been slow.
"There are still problems, but the bottom line is we wouldn't have had all these
lines installed if it wasn't for privatisation and all the fresh capital that brought,"
said Adriana Menezes, an analyst at the Yankee Group in Sao Paulo.
Communications Minister Joao Pimenta da Veiga has acknowledged that the
phone system is less than perfect, but he adds that telephones are no longer "a
privilege of the rich."
And the privatisation of Brazil's telecommunications market is held up as a
model in Latin American, where countries such as Argentina and Mexico took
much longer to achieve less.
Anatel allowed parallel companies into the market before and after the
privatisation and set stringent expansion targets for new players that are being
met.
The success of the privatisation was underlined last month when Anatel counted
32.4 million fixed telephones lines in the country. Not only was that well ahead
of the 29 million target for all of 2000, it was just short of the 2001 goal of 33
million fixed lines. |
