The Brazilian government had several clear and simple goals
when it privatized its state-run telecommunications company
Telebrás in 1998: stimulate competition and ensure
widespread telephone usage. The government also wanted to sell
the Telebrás network for as much as it could. The plan,
despite its flaws, worked. The government raised $18.92 billion
from the Telebrás privatization auction.
Time to Rebuild the Balance Sheet
After several years of sinking billions of dollars into government-mandated expansion programs, Brazil's phone companies are finally ready to start increasing revenues and reducing debt.
Before privatization, telephones were only for members of
middle class and up. Since 1998, penetration rates for
fixed-line phones have risen steadily as foreign companies
poured another $20 billion worth of investments into the
sector. And competition did indeed surge after the government
broke Telebrás into a mosaic of regional and national
local networks, long-distance carriers and cellular
Although the network now operates tolerably well, the
industry is rife with shareholder disputes and bitter rivalries
between companies struggling to get ahead in...
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