Brazilian telecom watchdog says mobile market to remain competitive

BRASILIA, March 10 Mon Mar 10, 2014 8:01am EDT

BRASILIA, March 10 (Reuters) - Brazilian telecom regulator Anatel will scrutinize any merger that could result in a smaller number of mobile phone carriers and will only approve those based on strong economic reasons, President Joao Rezende told Valor Economico.

Brazil's mobile phone market will continue to have four big independent carriers through the next two or three years, which is a positive scenario as it fosters competition, Rezende said in an interview that the paper published on Monday.

"Anatel will not come up with any policy to concentrate the Brazilian market, even though we cannot rule out this outcome," Rezende said. "We would need to know if a foreign group is losing strength overseas, jeopardizing its ability to keep investing here. But we haven't seen concrete signs of that so far."

Since late last year, persistent media reports have suggested the possible breakup and sale of TIM ParticipaƧƵes , the nation's second-largest wireless operator. Such a deal could ease antitrust issues facing Telefonica in Brazil as it tightens its grip on TIM's parent, Telecom Italia .

The companies involved in the reports have denied any such negotiations.

Brazil's crowded wireless market has slowed sharply from a recent boom, when falling prices and low unemployment resulted in growth to more than 270 million mobile connections in a country of nearly 200 million people.

The slowdown, stemming from tighter credit and eroding consumer confidence, is reinforcing expectations among some analysts that Brazil might soon lose one mobile carrier.

But Rezende said that instead of losing competitors, Brazil's mobile phone market could gain a fifth big carrier with the expansion of NII Holdings Inc's Nextel or the arrival of a foreign company in the 4G market through an auction in August.

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