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Brazil - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. Brazil's telecommunications industry has undergone a complete transformation since early-1998, when state-owned Telebrás acted as a holding company for 28 operating companies: one long-distance operator (Embratel), which also provided telex and data communications services, and 27 companies which provided local, inter-state long-distance, and mobile communications services at the state level. Four independent telephone companies provided services outside the Telebrás system, in specific geographical areas, accounting for 9% of all lines in service (Companhia Riograndense de Telecomunicações (CRT), Companhia de Telefones do Brasil Central (CTBC Central), Serviço Telefônico Municipal de Londrina (Sercomtel), and Centrais Telefônicas de Ribeirão Preto (CETERP)). The mobile sector was opened to competition in 1997, when companies were licensed to provide B band cellular services in 10 regions in competition with the Telebrás A band cellular operators. The Telebrás companies were amalgamated into three regional (Tele Centro Sul, Tele Norte Leste, and Telecomunicações de São Paulo), one long-distance (Embratel), and eight cellular operating companies in May 1998, prior to being privatised in July that year. The four independent telephone companies were not incorporated into Telebrás: CRT, Sercomtel, and CETERP were all owned by municipal governments and were privatised during 1997 and 1998 while CTBC remains privately-owned by Grupo Algar. The privatisation was one of the single largest privatisations in the world, netting over R$22,000 million, against the combined minimum bid of R$13,500 million. Immediately the privatisation was concluded, the Brazilian regulator initiated plans to offer "mirror" concessions to operate in competition with the four former Telebrás fixed operators. The first mirror concessions were awarded in January 1999, to companies now known as Intelig Telecomunicações for the mirror concession to Embratel and Vésper Holding for the mirror concession to Tele Norte Leste. Three companies put forward bids for the mirror concession to TELESP, which was awarded in May 1999 to Vésper São Paulo SA. It was not until September 1999 that the final mirror concession was awarded, to a consortium led by Global Village Telecom (GVT). Since January 2002, the Brazilian telecommunications market has been opened to full competition. Anatel is now able to grant an unlimited number of licences for the provision of local, intra-regional long-distance, inter-regional long-distance, and international long-distance services. The former Telebrás operators are able to apply for licences to provide such services provided they have met the network rollout and quality of service obligations contained in their concessions. The Brazilian mobile market is complex, with up to four bands (A, B, D, E) of frequencies licensed to operators in each of 10 operating areas. The most competition is seen in area 5 (Paraná and Santa Catarina states), where two A band operators (the former Telebrás operator and independent operator) compete with a B band operator, two D band operators, and an E band operator. In area 10 (six states in the north-east of the country) only three companies compete for cellular services: one each in the A, B, and D bands. There has been considerable consolidation in the Brazilian mobile market in recent years. VIVO, the Portugal Telecom/Telefónica Móviles joint venture dominates the A band with six A band operators, in addition to owning two B band companies (it has recently been reported that Telefónica Móviles has offered to buy Portugal Telecom's share in the venture); Telecom Americas, wholly-owned by Mexico-based América Móvil which operates under the Claro brand owns six of the 10 B band operators as well as a D band operator; while TIM Brasil owns several A, B, C, and D operators. TIM Brasil had entered into an agreement to take over the three E band cellular operations of fixed-line operator Brasil Telecom, but this agreement was annulled in May 2006. Brasil Telecom has said that it may yet enter into a fresh agreement to sell its wireless operations to TIM. Oi, the subsidiary of incumbent fixed-line operator Telemar, is a more recent entrant to the market, having acquired a D band licence for the whole of PCS region 1 (equivalent to cellular areas 3, 4, 8, 9, and 10 and roughly corresponding to its fixed-line operating area). Telpart is the controlling shareholder in two A band operators: Amazônia Celular and Telemig Celular.
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