UPDATE: Brazil's TIM Hopes Sales Ban Will Be Lifted Next Week

Date : 07/26/2012 @ 5:21PM
Source : Dow Jones News
Stock : Oi PN (OIBR4)
Quote : 3.48  -0.03 (-0.85%) @ 12:31PM
Oi share price Chart

UPDATE: Brazil's TIM Hopes Sales Ban Will Be Lifted Next Week

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--TIM hopes sales ban to be lifted next week

--TIM sees little financial effect if ban is lifted soon

--Vivo asked for state-by-state details on planed improvements

(Adds details on other phone companies' progress in getting sales ban lifted.)

By Jeffrey T. Lewis

BRASILIA--TIM Participacoes SA (TSU, TIMP3.BR), Brazil's second-biggest mobile-telephone-services provider by market share, hopes to be able to resume as early as next week the sale of contracts in states where the government has banned new sales.

Last week, Brazil's telecommunications regulator, Anatel, imposed a ban on the sale of new mobile-phone contracts in certain states by three providers: TIM, Oi SA (OIBR, OIBR4.BR), the fourth-biggest provider by market share, and the Brazilian unit of America Movil SAB (AMX, AMX.MX), known as Claro, No. 3.

The financial effect of the sales ban for TIM should be almost "immaterial," said Franco Bernabe, chief executive of Telecom Italia SpA (TI, TIT.MI), which controls TIM.

The biggest impact has been on the company's image, he added. The Anatel ruling took effect Monday. Operators were given 30 days to present investment plans aimed at resolving customer complaints.

They face a fine of 200,000 Brazilian reais ($98,890) per region for each day they are late. Each of the three companies that were hit with a sales ban has since handed in its plans, as has Telefoncia SA's (TEF) Vivo unit, the biggest provider in the country, which wasn't banned from selling new contracts.

Anatel asked all four of them for more information, which the companies expect to provide next week. TIM's plan will redirect planned investment toward improving the quality of the network and customer service, which were the biggest areas of consumer complaints.

The reason quality declined, the company said, was that the investment plan fell behind schedule because of organizational and technical problems as well as difficulties related to two acquisitions TIM made in a short period of time.

Officials from Vivo said earlier Thursday that they plan to follow their investment program, which will spend BRL24.3 billion over a four-year period that started in January 2011. Anatel asked Vivo for more state-by-state details on how the company plans to improve service, an Anatel official said.

Oi handed in its plan Wednesday, and was asked by Anatel to make some adjustments, especially in the area of customer service. The plan was one that had already been developed before the sales ban was imposed, an Oi official said.

Claro turned in its plan on Tuesday, with new traffic forecasts and new plans to improve service after Anatel requested specific quality indicators by state and by month. Claro also promised to guarantee transmission quality and ensure sufficient capacity to meet demand during the soccer World Cup championship in 2014 and the Olympics in 2018, partly by installing a submarine cable connecting to the U.S.

Write to Jeffrey T. Lewis at jeffrey.lewis@dowjones.com

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