UPDATE 3-Brazil's TIM faces new government scrutiny over service

Fri Nov 16, 2012 6:18pm EST

* Regulator suspends sale of TIM's flat-rate promotion

* Anatel says needs time to analyze voice traffic

* TIM had sales suspended in 19 states in July

By Sérgio Spagnuolo

RIO DE JANEIRO, Nov 16 (Reuters) - Brazilian telecommunications regulator Anatel on Friday ordered TIM Participacoes, the nation's No. 2 wireless carrier, to stop selling a flat-rate promotional plan with unlimited calls per day because of concerns about service quality.

It was the latest regulatory setback for TIM, the Brazilian unit of Telecom Italia. In July, Anatel banned TIM's sales in 19 states for nearly two weeks until the company presented an investment plan to improve service.

TIM started selling its "Infinity Day" promotion on Monday, allowing customers to make unlimited local phone calls within the carrier's network for a flat daily rate of 0.50 real ($0.24) and unlimited long-distance calls for an additional 0.50 real a day.

The plan could bring "potential instability" to the company's network and "hurt the quality of service for all TIM customers," Anatel said in a decision published in Brazil's official gazette.

The regulator will analyze the promotion before deciding whether or not to let it go on, Anatel's Superintendent of Private Services Bruno Ramos said later.

"We will ask them for more data ... we need better forecasting of weekly traffic growth to determine if their demand curve is correct," Ramos told reporters in Brasilia after meeting with TIM executives.

He said the promotion could be approved in some parts of Brazil before others, depending on traffic and network capacity.

TIM shares closed down 5.11 percent at 7.61 reais on the Sao Paulo stock exchange, which closed down 1.56 percent.

The company's director of regulatory affairs, Mario Girasole criticized the agency for impeding competition in the telecommunications sector.

"If every promotion needs to go through technical analysis (by the regulators), that's the end of the telecom market. We'll have instead a cartel of companies all doing the same thing," he told Reuters in an interview.

The company said there was no risk of network instability from the promotion. In a statement, TIM said its network had capacity at least 30 percent higher than the estimated voice traffic in the 18 areas where it was offering the plan.

Anatel's decision, TIM added, will hurt some "12 million consumers who will not be able to benefit from an innovative promotion."

TIM has 30 days to provide Anatel with a study on the impact of the plan on its network and to make the necessary adjustments to ensure its service meets the agency's quality standards.

The company intended to sell the plan to prepaid customers on a promotional basis until Jan. 15.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article