Anatel on crash course with government over price hikes

30 Jun 2003

Brazil’s industry watchdog Anatel has sanctioned the country’s telecoms operators the right to increase their charges by on average 28.8% for the period July 2003 – June 2004 despite requests from the government that any hikes be phased in incrementally. The regulator had been widely expected to stagger the price hikes, starting with a 17.2% rise for the second half of 2003, however, in a statement given on 26 June Anatel supremo Luiz Guilherme Schymura announced it had abandoned this option, as it considered phasing the increase would be worse for consumers. Anatel has decided instead to stick to the rules laid down in each telco’s concession contract which dictates that price rises should be in line with the IGP-DI inflation index; last month the index determined that an overall hike of 30% was in order. Under the proposed price rises telcos now will be allowed to increase international long-distance rates by 10.5% and up to 42% for activating corporate and trunk lines. Meanwhile operators will be able to hike local telephony, long-distance and pre-paid services by up to 25%.

Anatel took its decision despite a direct request from the country’s president Luiz Inacio Lula da Silva to hold further negotiations designed to introduce rises in line with the government’s inflation targets. The watchdog’s action has angered the communications ministry too which is now contemplating launching a legal challenge to overturn the decision, with Minister Miro Teixeira vocal in his condemnation of what he termed ‘this abusive increase’.