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Technology Stocks : Lucent Technologies (LU)
LU 2.640-2.9%Jan 9 9:30 AM EST
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To: Anonymous who wrote (18790)12/8/2001 6:51:40 AM
From: elmatador  Read Replies (1) of 21876
 
Telecoms Sector Suffers Overcapacity - Brazil
(BNamericas.com) - Brazil's telecoms industry suffers from overcapacity due to the operators' scramble to fulfill 2003 build-out goals before year-end, according to the country's electronic industry association Abinee, Brazilian financial daily Valor Economico reported.

Only 62% of network capacity is currently in use, compared to 94% in June of this year.

Overcapacity is the direct result of government mandated coverage goals that forced operators to deploy millions of fixed lines in under-served areas in order to compete in next year's semi-deregulated market. Fixed line operators Telemar (NYSE: TNE) and Telefonica claim to have met build-out goals, as has long distance operator Embratel (NYSE: EMT).

Fixed line operator Brasil Telecom is the only incumbent that will not meet 2003 goals because it believes the requirements are not justified by market demand. Brasil Telecom CEO Carla Cico also cited rising uncollectibles as a problem, because many consumers in under-served areas cannot pay for service.

The industry's revenues are currently growing at a 5% annual rate, second to last in all of the sectors covered by Abinee.

However, Anatel's decision to ease requirements to enter next year's market should spur growth and revenues as new entrants will be able to target more profitable user segments without having to serve poorer areas, according to Abinee.
Business News Americas (BNamericas.com)

COMMENTS: LU should prepare itself for the write down! :-)
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