Audit court pushes Anatel on Telefônica deal

Thursday, December 7, 2017

Brazil's audit court TCU is pressuring telecom regulator Anatel to review a fines-for-investments deal closed with Telefônica Brasil as part of the watchdog's so-called conduct adjustment term (TAC) program.

The deal allows the conversion of 2.2bn reais (US$669mn) in regulatory fines into 4.8bn reais in investments by the operator in broadband, mobile telephony and fixed telephony.

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The TCU gave the greenlight to the deal in September, but asked for clarifications and demanded certain changes in the terms. The court gave Anatel 30 days to work on the terms and resubmit them to the TCU to assess, but the deadline was not met.

The court has now given Anatel another 45 days to provide detailed and specific explanations of how cities were chosen to receive fiber networks under the deal with Telefônica. The TCU also gave Anatel another 180 days to respond to the general questions on the format of the TAC program.

Among other things, the court ruled in September that Anatel should set intermediate targets for each indicator used to measure the general quality index, with possible sanctions for failure to meet those targets.

It also called for the sum of the fines applicable to the operator in the case of noncompliance with each additional TAC commitment, including daily fines, to be higher than the estimated amount of the investments.

Another obligation was that, on the conclusion of the first TAC, Anatel would have to run a cost-benefit comparison with direct collection of fines applied in a given timeframe, in order to study whether the fines-for-investments program provides real benefits to the public.

The deal with Telefônica is being opposed by competitor TIM and small, regional ISPs united in industry association Abrint. They see the deal as providing excessive benefits to the leading Brazilian telco, particularly in the fiber segment.