Incumbent local exchange carriers are lobbying Anatel for more flexibility regarding mergers when their licenses are renewed in a couple of years time. Speaking at Futurecom on Tuesday, October 29, Fernando Xavier Ferreira, president of the Telefonica Group in Brazil, said flexibility was called for, especially with regard to mergers, because effective competition has been produced by the industry structure created since privatization. This is particularly the case in local telephony, even in countries where privatization took place longer ago than in Brazil. The absence of competition won?t lead to a fall in quality of service if the regulator has the teeth to enforce tough standards written into the legislation, he argued. For Antônio Carlos Valente da Silva, deputy director-general of Anatel, however, license renewal shouldn?t entail flexibility of this kind because the eventual need for consolidation has always been part of the business model for the industry in Brazil and the existing rules allow for mergers and acquisitions in due time. An experienced observer notes, nonetheless, that the ILECs are keen to win permission for mergers. In particular, says the source, they want to complement their networks by absorbing Embratel, which owns an enviable customer portfolio, a nationwide multiservice network and attractively low-priced assets following problems with earnings growth and the collapse of its parent company, Worldcom.
New rules
