Two years on, Brazil phone sell-off powers revolution
Reuters, 07/28/2000 17:05
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 (MADRID:TEF) and Portugal Telecom (LIS:PTCO) , 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 (SAO:TELB3) was carved up and sold off in Latin America's biggest ever privatization, 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 privatization 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 privatization 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 privatization and set stringent expansion targets for new players that are being met.
The success of the privatization 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. katherine.baldwin@reuters.com))
Copyright 2000, Reuters News Service |
