Recent regulations unclear

20 Jun 2003

Brazilian fixed line services providers must decide whether to renew their 20-year concession contracts by the end of June. Concerns are being voiced, however, that the new contracts, which would come into operation on 1 January 2006, have not been properly finalised, leaving them effectively to sign them ‘in the dark’. There have been problems in the industry since deregulation when investors bought into the country’s newly privatised companies before a solid regulatory framework had been established. Dissatisfaction with the situation increased last year when the government announced that it planned to renegotiate contracts rather then simply renew them. Despite resistance from telcos and investors alike the state has ploughed ahead with its changes. Although the final details are still vague, investors now feel that if they are to participate fully in the industry, they must know the rules in advance.