Brazil acts to boost mobile-phone market
news.ft.com
By Raymond Colitt in São Paulo
Published: July 16 2002 22:08
Brazil's telecommunications regulator, Anatel, will on Friday detail new rules for the country's cellular telephone market in an effort to increase investments in the coming years.
The proposed reforms will improve operating conditions in the sector by restricting plans for more competition and allowing mergers between cellular telephone companies.
The move comes after operators criticised Anatel's earlier plans as excessively restrictive and warned rising costs and a slowing economy could delay ambitious investment plans and further stall growth and modernisation.
"The only sector with strong investment potential in the coming years is the cellular market," said Luiz Mann, telecommunications analyst with UBS Warburg, the investment bank, in Rio de Janeiro. "To secure that investment, the regulator had to meet company demands to improve operating conditions."
Anatel expects investments of around R$28.6bn ($10bn) by 2005 with the number of cellular phone lines increasing to around 58m from 30.6m. Independent analysts say growth could fall short of those targets.
With real wages falling amid slow economic growth, companies face higher costs to capture lower-income consumers. But under the new riles operators can cut off non-paying customers more quickly.
Anatel will also backpedal on the opening of several areas to increased competition. Plans to have market forces dictate inter-connection fees between cellular and fixed line telephone operators have been scrapped until 2005. Instead they will continue to be fixed according to contract. Cellular companies had feared a cut in revenues from inter-connection fees as a result of the bargaining power of fixed line operators.
Under the reforms, subject to a month's public consultation, Anatel will significantly limit initial plans for new competition from long-distance carriers, preventing heavy revenue losses for cellular companies. Minimum performance requirements, including customer service targets, are also to be eased.
The reforms will also spur companies to switch to a new type of operating license known as Personal Mobile Service, or SMP, which Anatel hopes will offer customers more services. It would also allow mergers between companies, further reducing operating costs and unifying technologies and coverage throughout the country.
Portugal Telecom said this week the new regulations could allow the proposed merger of its cellular phone assets in Brazil with those of Spain's Telefónica to go ahead by September. |
