The electricity industry crisis has had a significant effect on Eletronet, which owns one of the largest telecommunications networks in Brazil. Eletronet is controlled by Eletrobrás, via Lightpar, and AES. Eletrobrás in turn belongs to the Brazilian Government. AES is a U.S.-owned energy company. The board of directors met Tuesday, March 18, to discuss Eletronet?s future but punters in Brasília were betting there would be no bailout. The Government won?t inject funds into Eletronet, they said, which has debts totaling some 500 million Brazilian Reals (now about 142m US Dollars), mostly owed to suppliers. Other problems range from substantial idle capacity to ineffectual planning for competitiveness in the telecoms market. Moreover, it has a foreign shareholder (AES) in default with BNDES, the national development bank, and apparently not very interested in safeguarding its Brazilian investments.
Following Tuesday?s board meeting, Eletronet must convene a general assembly of shareholders. This is when it will become clear whether anyone is prepared to inject the capital required to save the company, and if so who. The main creditors, Lucent and Furukawa, could file to have Eletronet declared bankrupt but they?ll want to leave that option as a last resort for two reasons: (1) they would take longer to be paid, and (2) they (or at least one of them) would have to install equipment which Eletronet has purchased but which has never been delivered.
Possibilities
The possibility of a white knight riding to Eletronet?s rescue are remote. TELETIME News has learned that two offers of outright purchase are on the table: one from Nelson Tanure, proprietor of Jornal do Brasil, and the other from GP Participações, one of Telemar?s shareholders. Few seasoned observers expect anything to come of either bid, especially Mr Tanure?s. Equally remote, apparently, are the chances that the Communications Ministry will use Eletronet?s 17,000 km network as a means of controlling the telecoms market, however much this idea evidently appeals to some. For now the decision is in the hands of the Mining & Energy Ministry, to which Eletrobrás is subordinated. And the ministry?s view is that the electricity industry has more pressing problems to solve than what to do with its telecoms networks. So no government funds will be disbursed to rescue Eletronet.
What will be done with the network if Eletronet is allowed to die? The creditors may want to seize it in part-payment of the debt, but the network is physically inextricable from the power grid protection system: Its optical fibers are located inside the OPGW cables used to protect transmission lines against lightning. Furthermore, the utilities need at least part of Eletronet?s telecoms infrastructure to monitor and manage their own networks. The solution could be to empower the utilities to effect a compulsory purchase of Eletronet?s fibers. If so, plenty of hard talking will be required to settle on a price. For Eletronet?s creditors (and a future bankruptcy trustee), the network has immense potential value in the telecoms arena but the power companies would value it merely as a management tool. To make matters worse, electric power must be supplied uninterruptedly and outages are severely penalized.
