October 4, 2019 / 9:33 PM / 12 days ago

Brazil's Bolsonaro signs telecoms law to boost sector

BRASILIA, Oct 4 (Reuters) - President Jair Bolsonaro signed a law modernizing Brazil’s telecommunications regulations on Friday in a move long expected by the industry to allow new investment opportunities and help salvage bankrupt carrier Oi SA .

The law, which took five years to clear Congress, will boost telecom companies by lifting restrictions on sales of their formerly state-owned assets. It will also allow for a secondary market for trading cellphone frequencies.

Fixed-line concession holders will be allowed to migrate their licenses to a private regime in which they can more freely allocate investments to expand broad-band services.

“Fixed-line companies got a pathway out of the over-regulated concession regime, while cellphone companies can now trade frequencies,” said Ricardo Tavares, CEO of TechPolis, a telecom-policy consulting company.

Satellite companies will be able to apply directly for frequencies, as opposed to through auctions.

“This law gave President Bolsonaro a chance to build his deregulation credentials in a sector that badly needed it,” Tavares said.

Telecoms association SindiTelebrasil praised the removal of “obsolete” restrictions that will free up resources for the expansion of internet access for Brazilians.

“The new legal framework for telecoms will finally put Brazil on the road to the digital economy,” the lobby group said in a statement.

Analysts at investment bank Itau BBA estimate the new law, which underwent no last minute changes in Congress or vetoes by the president, could add 2.4 reais to the value of shares of Telefonica Brasil and 0.5 reais to Oi’s shares .

Telefonica Brasil shares closed 1.89% higher, but Oi’s common shares were 2% down at the end of trading on the Sao Paulo stock market on Friday, and preferred shares fell 2.74% .

The law is also expected to benefit Claro, the local subsidiary of Mexico’s America Movil SAB de CV, and TIM Participações SA, a subsidiary of Telecom Italia SpA.

The four telecom companies each control between 19% and 29% of Brazil’s wireless market. (Reporting by Anthony Boadle Editing by Tom Brown)

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