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Legal Guide for Foreign Investors in Brazil - Apex-Brasil

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<strong>Legal</strong> <strong>Guide</strong> <strong>for</strong> <strong>Foreign</strong> <strong>Investors</strong> <strong>in</strong> <strong>Brazil</strong><br />

unfeasibility, or when an excessive number of competitors might negatively<br />

affect the provision of a service of <strong>in</strong> the public <strong>in</strong>terest.<br />

16.2. Development of Mobile Telephony<br />

The first mobile telephone services <strong>in</strong> <strong>Brazil</strong> were provided by companies of the<br />

the TELEBRÁS System (<strong>in</strong> a frequency sub-level known as Band A). Follow<strong>in</strong>g<br />

approval of Constitutional Amendment 8/95, regulations were issued <strong>in</strong> 1996<br />

discipl<strong>in</strong><strong>in</strong>g the provision of mobile cellular services (Serviço Móvel Celular – SMC)<br />

<strong>in</strong> preparation <strong>for</strong> private provision of Band B services.<br />

Initially exploited through concessions, s<strong>in</strong>ce the entry <strong>in</strong>to <strong>for</strong>ce of the General<br />

Telecommunications Law (LGT), mobile cellular services have been provided<br />

exclusively by private companies that hold authorizations to provide such<br />

services.<br />

The General Telecommunications Law replaced all preexist<strong>in</strong>g regulations,<br />

norms and rules on mobile communications with the current system of issued<br />

by ANATEL, S<strong>in</strong>ce 2000, these rules, <strong>for</strong> Personal Mobile Services (PMS) have<br />

been gradually implemented.<br />

Between 2001 and 2003, auctions were held to award up to three additional<br />

mobile licenses per region (correspond<strong>in</strong>g to Bands C, D and E). Corporate<br />

contenders were permitted to bid <strong>for</strong> PMS authorizations <strong>in</strong> each of the three<br />

regions, and permitted to acquire licenses <strong>for</strong> all three regions. However, they<br />

were <strong>for</strong>bidden to acquire more than one authorization with<strong>in</strong> each region.<br />

Any company <strong>in</strong>corporated <strong>in</strong> <strong>Brazil</strong>, even if controlled by <strong>for</strong>eign <strong>in</strong>vestors,<br />

may hold an PMS license.<br />

New rules expand<strong>in</strong>g the coverage areas led to mergers and takeovers of operat<strong>in</strong>g<br />

companies. There has been rapid growth <strong>in</strong> mobile telephony services <strong>in</strong> <strong>Brazil</strong>,<br />

especially with <strong>in</strong> the area of pre-paid cellular phones. Currently GSM is the<br />

technology most widely employed, followed by CDMA and TDMA.<br />

Anatel is currently bidd<strong>in</strong>g PMS nationwide authorizations (E, M and L-Bands).<br />

This bid will not only allow new mobile service providers, it will also make<br />

possible that current service providers expand their services. The new subfrequency<br />

Bands shall only be used after the 3G auction. There<strong>for</strong>e, companies<br />

that obta<strong>in</strong> license <strong>for</strong> E, M and L Bands will have to wait the w<strong>in</strong>n<strong>in</strong>g bidders of<br />

3G or obta<strong>in</strong> an express authorization from Anatel to obta<strong>in</strong> such license.<br />

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