This content is from: Local Insights

Brazil

The National Telecommunications Agency (Anatel) announced on September 8 1998 that the auction of the so-called mirror companies is set for December 2 1998 on the Rio de Janeiro Stock Exchange. The mirror companies will be able to exploit fixed telephony in three regions: region one (Tele Norte Leste mirror), region two (Tele Centro Sul mirror) and region three (Telesp mirror), as well as in competition with Embratel (domestic and international long-distance services, telegraphy, maritime communications and data transmission). Accordingly, there will be four mirror companies, all starting from non-existing structures, which will require considerable investment in infrastructure.

Anatel has fixed the reference price for the bid at R2.2 billion (US$2.59 billion). The winning companies of the Telebrás System privatization (which occurred in July) will not be allowed to participate in this bid. Bidding groups will need to commit themselves to investing in infrastructure. Also, the minimum value payable to the government will be equivalent at least to the value of the guaranteed investments.

The main objective of the government through the bid for the mirror companies is to implement the regime of competition in the telecoms sector in Brazil. The authorization for exploitation of the mirror companies is focused on the quality of services offered to the public and on the creation of a competitive environment among the telephone operating companies.

Eliana Maria Filippozzi

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