Investors and analysts evidently concluded that Embratel, the incumbent long-distance carrier, stands to benefit most from the policy proposals announced Tuesday, May 20, by the Communications Ministry.
Embratel preferred shot up 6% in the latter part of the session, then lost a little to close up 5.38% on 4.70 Brazilian Reals. Voting stock and ADRs gained 5% on the day.
The reason is that the ministry?s proposals would give Embratel what it?s never managed to wrest from Anatel: (1) interconnect and unbundling rates based on a simulated efficient company with a long-term incremental costing model; (2) separation of different services provided by the same company for accounting purposes, showing whether a telco offers special prices to other companies in the same business group; and (3) number portability, making it easier for users to negotiate with telcos on prices and other conditions, and increasing Embratel?s competitiveness in local telephony.
Telecom policy
