The incumbent local exchange carriers can?t even think of taking over Embratel unless the law is changed, said Luiz Guilherme Schymura, director-general of Anatel, in São Paulo Monday, November 25. Speaking at a seminar on ?Communications under the Lula Administration?, he said Anatel hasn?t been consulted about such a deal but it wouldn?t stand a chance of approval. The General Licensing Plan forbids any change of ownership in the ILECs or Embratel, the incumbent long-distance carrier, until the end of July 2003. Changes could be made after that, Mr Schymura said. The 1998 General Telecommunications Act states that there shall be four fixed-line incumbents and that they must not merge. Last week Fernando Xavier Ferreira, president of the Telefonica group in Brazil, admitted to holding talks about a takeover of Embratel with Telemar, Brasil Telecom and private equity fund manager Bassini, Playfair & Wright.
Competition
?As an employee of Embratel I?m delighted to hear all this talk about a takeover,? jokes Purificación Carpinteyro, vice president of external affairs. Embratel stock has posted strong gains in response to reports of a possible deal. In Ms Carpinteyro?s opinion the ILECs are interested in swallowing up Embratel both because of its 50% share of the corporate segment and because it?s ?the only viable competitor at the moment?. A deal of the kind mooted in the media would be illegal under the Telecoms Act and Brazil?s anti-trust legislation, she says. ?There are buyers all right. It remains to be seen whether there?s a seller.?