General Telecommunications bill
In December the General Telecommunications bill was submitted to Congress. The bill reflects the changes introduced by Constitutional Amendment No. 8 of August 1995, which allow concessions of public telecommunications services to be awarded to the private sector and establish a regulatory agency for the sector. The bill also aims at paving the way for the privatization of the operating subsidiaries of the state-owned utility Telebrás, which will retain existing concessions in relation to Band A mobile phone services. Telebrás is the flagship of the São Paulo Exchange (Bovespa), whose index rose 49.98% in real terms in 1996. Telebrás is also listed in New York with ADRs. Data released by the Bank of New York showed that Telebrás was the second most negotiated foreign offering in New York in 1996.
As of January 13 1997, copies of the invitation to bid for Band B concessions have been made available. Qualifying documentation and proposals will be received simultaneously for 10 areas covering the whole of Brazil on March 30 1997. The winning bid will be the one offering the highest price for the concession and the lowest prices to end-users.
Also in December, 35% of the telephone company of the state of Rio Grande do Sul, CRT, was sold to a consortium including Telefónica de España for approximately US$500 million, 54.7% more than the minimum price required.
Foreign capital in the financial sector
The 1988 Federal Constitution subjected increases in existing foreign participation in the Brazilian financial sector to a new law on the matter which is still awaited. However, this restriction does not apply to new foreign investments deemed to be in the best interest of the Brazilian government. A Presidential Decree was issued on December 9 1996 to allow:
- foreign capital vehicles to acquire non-voting shares of financial institutions with headquarters in Brazil;
- such non-voting shares to be used to back up international issues of depositary receipts.
The matter has been further regulated by National Monetary Council Resolutions 2344 and 2345 of December 19 1996.
The Monetary Council has also suggested that the President of the Republic allow Brazilian branches of foreign banks to act as multiple banks with up to five different portfolios.
Eliana Maria Filippozzi