Schymura: ILECs can?t take over Embratel unless law is changed

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.?

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