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Privatization of phone companies - BrazilThe telecommunication companies were privatized in 1998. The privatization had to be preceeded by a Constitutional Ammendment, in the first year of the government of President Fernando Henrique Cardoso; this ammendment came to allow private corporations to run telecom businesses in Brazil. In 1997, Congress approved law nr. 9472, the Telecommunications General Act. Among other mesures, the law established guidelines for the privatization of the sector. The privatization auction happened on July 29th 1998. The companies were divided and sold in batches. The local calls phone companies were split in three geographical zones: I) the State of Sao Paulo; II) States of North, NorthEast and SouthEast; III) States of South and Central West. Embratel, the then monopolistic long distance carrier, was sold alone. The mobile companies were divided in eight geographical zones. According to the government, the auction was a financial success. Between fresh cash and debt transfers, the Treasury collected over US$20 billion, with an overprice of about 63%, compared to the minimum bids. Click to read more about the privatization of the Brazilian telecommunications system. More than money, the success of the privatization can be measured by the gains in efficiency. Back to Top |