The TCU pressures Anatel on Telefônica deal

Natalie Bannerman
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The Tribunal de Contas da União has given Anatel an extra 180 days to answer questions over its fines-for-investment deal with Telefônica Brasil

The Tribunal de Contas da União (TCU), Brazil’s audit court is pressuring Anatel, the telecoms regulator, over its fines-for-investment deal with Telefônica Brasil.

Forming part of Anatel’s so-called conduct adjustment term (TAC) program, under the terms of the agreement, instead of Telefônica paying 2.2bn reais (US$669 million) in regulatory fines for years of quality of service, Anatel will to convert that into a 4.8bn reais (US$1.4 billion) investment in broadband, mobile telephony and fixed telephony for the country.

The TCU approved the deal back in September but asked for clarification and that certain changes be made to the terms. The TCU initially gave Anatel 30 days to implement these changes and resubmit them, but that deadline was missed. It has now given Anatel an additional 45 days to provide specific explanations of the cities chosen to receive fibre networks under the deal with Telefônica. The TCU has also given Anatel an extra 180 days to address the general questions about the conduct adjustment term (TAC) program.

Additionally, the court ruled that Anatel needed to set specific targets for each indicator used to measure the general quality index, with potential sanctions for failure to meet those targets. It also asked for the total of the fines applicable for noncompliance of each TAC commitment, to be higher than the amount of investment. Another term was that on completion of the first TAC, Anatel will need to run a cost-benefit comparison with direct collection of fines within a given time frame, in order to ascertain whether the fines-for-investments program provides real benefits to the public.

TIM (Telekom Italia) and small, regional ISPs united in industry association Abrint, are said to be in opposition to the deal, claiming that it provides excessive benefits to the leading Brazilian telco, particularly in the fibre market.

Brazilian operator Oi, which is currently facing bankruptcy, is in the midst of talks with China Telecom over the latter acquiring the former. Anatel, condemned existing proposals as having “ruinous potential to the interests of the company” and the community at large. The regulator has threatened Oi’s directors and executive officers with sanctions if they sign “any contract” to support the existing judicial recovery plan “or similar document”.