The long drawn out struggle to pass the necessary legislation passed to enable the privatization of Brazil’s telecommunications system has cleared another hurdle. Brazil’s lower house of Congress approved a bill that regulates Telecommunications sector and set down rules for the privatization of the state-controlled Telecomunicacoes Brasileiras SA (Telebras) system. The Chamber of Deputies voted 312-99 in favor of the bill that will now go to the Senate for a final vote.Under the terms of the bill private companies will be permitted to operate in the sector. In addition, it will allow foreign investment in the massive Brazilian telecommunications market, which has been estimated to be worth at least $20 billion. The bill also provided for the regulatory body, Anatel, to set phone rates for three years following deregulation, after which operators would set their own prices. The first auctions for telecoms licenses could be held soon after the regulatory body is in place, which is scheduled for October. Limits will remain on foreign capital participation in the privatization of Telebras but the Brazilian President will set these on a case-by-case basis. Separately, the chamber rejected a proposal to maintain state control of as federally controlled Telebras as a single entity. Telebras is expected to be split into five or six regional companies before privatization takes place.
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