--Brazil mobile phone operators scramble to assemble investment
plans to end ban on sales
--Regulator Anatel banned three operators from selling new lines
from Monday because of poor quality
--TIM, hardest hit by the ban, files an injunction in court to
prevent the ban from coming into effect
--Shares in telecom firms outperform the broader market after
heavy losses Thursday
By Matthew Cowley
SAO PAULO--Mobile phone operators in Brazil scrambled to pull
together investment plans to present to the government after
providers representing close to 70% of the market were banned from
selling new lines due to the poor quality of service, while one
company turned to the courts.
TIM Participacoes SA (TSU, TIMP3.BR), Brazil's second-biggest
mobile-service provider by market share, said that on Friday it
filed an injunction to be able to continue selling new lines on
Monday. TIM was hardest hit by the regulator's decision, with the
ban extending across 19 states, including Rio de Janeiro state and
the Federal District, which encompasses the capital, Brasilia.
Nonetheless, the company said it also is working on the
investment plan, which Anatel had requested in order to lift the
ban.
A spokesman for Anatel said the regulator wasn't aware of any
legal action by TIM.
The operators have 30 days to present their investment plans.
They face a fine of 200,000 Brazilian reais per region for every
day they are late.
Executives from Oi SA (OIBR, OIBR4.BR), the fourth-biggest
provider, met Friday morning with Anatel officials, as they sought
to understand the reasons behind the ban. Oi will have to stop
selling new lines in five states from Monday; the firm said it has
set up a team to prepare an investment plan to be presented to
Anatel, and will deliver a draft next week.
Brazil's third-biggest provider, Claro, which faces a ban from
selling new lines in three states, was ahead of the pack, saying it
had delivered its investment plan to Anatel on Thursday. A
spokesman for Anatel said that Claro executives had handed in a
preliminary plan, and that there would be another meeting with
Claro on Monday.
Brazil's largest mobile phone operator, Telefonica Brasil SA
(VIV, VIVT4.BR), wasn't banned from selling new lines, but must
nonetheless provide an investment plan to Anatel within 30 days. A
spokeswoman for Telefonica Brasil, a unit of Spain's Telefonica SA
(TEF, TEF.MC), didn't respond to a request for comment when
contacted Friday.
Still, Telefonica hasn't completely escaped the regulator's
attention. Anatel on Friday said it must improve its fixed-line
service, and provide a mechanism for compensating customers for
service interruptions. If it doesn't comply within five months, it
faces a fine of 20 million Brazilian reais ($9.9 million).
The mobile phone operators appear to have been caught
wrong-footed by the regulator. They all complained that Anatel
based its decision using data that weren't ordinarily used to
measure quality of service. They all claimed to score highly based
on the usual numbers, and that the data Anatel used were somehow
misleading or outdated.
"The suspension of sales was based on data and indicators that
are different from those that are usually used by Anatel itself to
monitor the performance of the network," TIM said in its
statement.
Claro said Anatel's criteria "related to specific problems" at
one customer service center that covers the states from which it
has been banned. It said the problems have already been resolved.
And Oi said the data don't reflect "massive" investments and, in
the southern state of Rio Grande do Sul in particular, don't
"reflect the real situation."
The Anatel spokesman wasn't immediately able to comment on the
operators' assertions.
Shares in telecom operators had a better day, in some respects,
following the heavy selling Thursday. Shares were broadly lower,
but not as much as the iBovespa index, which was down nearly 2% on
the day. TIM shares were down 0.7%, while Telefonica Brasil shares
were down 1.7%, and shares in Oi were up 0.5%.
New York-traded shares in America Movil were down 0.6%.
"The financial impact per operator is likely to be minor, as we
expect each operator to quickly comply," said Dan Kwiatkowski, a
strategist at UBS. "But this is very negative
publicity...especially for TIM." TIM in particular "needs to invest
more to maintain its competitive position," he wrote in a
report.
Write to Matthew Cowley at matthew.cowley@dowjones.com
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