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Tim Participacoes SA (TIMP3), America Movil SAB (AMXL) and Oi SA (OIBR4) can restart sales of mobile-phone plans today across Brazil, ending an 11-day ban after the companies told the government they would improve their networks.
In talks with telecommunications regulator Anatel, the companies committed to reducing dropped calls and improving customer service, said Joao Rezende, president of the agency. The carriers pledged to spend a combined 20 billion reais ($9.8 billion) on network upgrades through 2014.
“This improvement plan is the first step,” Rezende told reporters yesterday in Brasilia. “We’re going to be following the evolution in network service improvements, keeping a close eye on the indicators, to make sure the situation doesn’t return to what it was before the ban.”
The end of the ban, in place since July 23, would ease the pressure on Rio de Janeiro-based Tim, whose shares fell 23 percent in the month of July amid investor concern the sales ban would slow the carrier’s growth. Tim, a unit of Milan-based Telecom Italia SpA (TIT), rose 3.6 percent to 9 reais yesterday in Sao Paulo.
Tim, the second-largest Brazilian carrier behind Telefonica Brasil SA, had been barred from selling new plans in 18 states and Brazil’s federal district because of network failures. The company will spend 8.2 billion reais through 2014 on improvements, Rezende said. Tim has budgeted 3 billion reais in capital expenditures in 2012, according to its second-quarter report.
America Movil was blocked in Sao Paulo, the most populous state, and two other states. The company will invest 6.3 billion reais in its network through 2014, Rezende said. America Movil has $9.5 billion in capital expenditures planned for this year across the 18 countries in which it operates.
Oi, whose sales were banned in five states, will make 5.5 billion reais in network investments through 2014, Rezende said. The company’s capital expenditure budget for this year is 6 billion reais, Chief Financial Officer Alex Zornig confirmed this week in a conference call.
“The regulatory agency hasn’t done anything that it hasn’t already done in the past, which is to guarantee good service to the consumer,” Zornig said yesterday in a phone interview. “It’s nothing that will affect our results in the future.”
Anatel will monitor dropped calls and network congestion quarterly, Rezende said. The agency also will keep tabs on each company’s rate of customer complaints, he said.
The carriers should begin showing improvements in customer service over the phone in the next 30 days, and their networks should begin performing better in four to six months, Rezende said. If there isn’t improvement, the companies’ sales could be suspended again, he said.
Both Tim and Rio de Janeiro-based Oi said this week that the government ban won’t affect their forecasts for sales and earnings this year. The investment plans they presented to Anatel won’t require them to increase their budgets for network upgrades this year, the companies said in conference calls with analysts.
America Movil, based in Mexico City, doesn’t provide a forecast for sales and profits. The company isn’t going to increase its investments based on its talks with Anatel, Chief Executive Officer Daniel Hajj said last week on a conference call.
Oi fell 3 percent to 9.15 reais yesterday in Sao Paulo. America Movil slid 0.3 percent to 17.59 ($1.32) pesos in Mexico City.
To contact the reporters on this story: Carla Simoes in Brasilia Newsroom at firstname.lastname@example.org; Crayton Harrison in Mexico City at email@example.com
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