Brazil May Invest $11 Billion to Revive Telebras, Alvarez Says

Brazil may invest up to 20 billion reais ($11 billion) to revive state-owned telephone company Telecomunicacoes Brasileiras SA and increase competition by offering broadband services for half the price charged by local carriers, an official said.

The government is considering a plan to have Telebras, as the company is known, manage the nation’s fiber optics infrastructure and provide broadband services to consumers directly, said Cezar Alvarez, national coordinator of digital policy for President Luiz Inacio Lula da Silva.

Telecommunications costs in Latin America’s largest economy are “high because of a monopoly,” said Alvarez, adding that some cities are served by a single carrier. Brasilia-based Telebras may offer broadband services from 15 reais to 35 reais monthly, compared with an average cost of 70 reais charged by existing carriers, Alvarez said.

“Broadband service is becoming a bottleneck in Brazil,” Alvarez said in an interview yesterday in Brasilia. “It’s slow, expensive, concentrated and unequal.”

Telebras, whose main assets were sold to investors including Telefonica SA in 1998, has more than tripled in Sao Paulo trading this year. The stock fell 19 percent yesterday to 2.41 reais.

President Lula will review the Telebras plan today and may announce measures next month, Alvarez said. The government aims to use Telebras to meet a goal of increasing broadband access to 30 percent of the country’s poorest population from just 0.6 percent now, he said.

“We need a small and specialized company to manage the system,” Alvarez said. “Studies show we could take advantage of Telebras.”