Spotlight: The pledges of Brazil's new communications minister

Maximizing 5G adoption and penetration, expanding connectivity to schools, reinforcing digital inclusion through subsidies, and upping investments in postal service Correios, which will no longer be privatized, are the main priorities of Brazil’s new communications minister Juscelino Filho.

At his swearing-in ceremony in Brasília, Filho also mentioned the reduction of red-tape for licensing, permitting and other authorizations, and the “recomposition of investments, the improvement of governance, the continuity of programs and innovation.”

He added, “digital inclusion with equity and quality, universality; democratization and popularization of access to information via internet, [as well as] the improvement of education and the quality of teaching via school connectivity are top priority topics.”

Regarding state-run telco Telebras, Filho said the company has a key role in expanding connectivity due to its satellite coverage. “In telephony, the central theme is maximizing the incorporation of 5G technology, particularly accelerating the expansion of access to premises and territorial reach.”

Filho, a doctor and former federal lawmaker with no previous experience in the communications area, wants to maintain dialog with congress and highlighted the role of private operators and telecoms watchdog Anatel to facilitate access and digital inclusion.

Brazilian telecom operators invested 26.5bn reais (US$5.11bn) in the first nine months of 2022, an increase of 3.7% year-on-year, according to association Conexis Brasil Digital.

In Q3, investments amounted to 9.1bn reais, up 8%, Conexis said.

In January-September, gross revenue hit 205bn reais compared to 196bn in the same period 2021. Conexis represents the largest telcos in the country: Telefônica Brasil, Claro, TIM, Oi, Algar and Sercomtel.

FUNDS

Filho also pledged to allocate resources from the recently reformulated universal services fund, Fust, and from other sector funds, such as telecoms technology development fund Funttel, to enable access and services in areas with low economic appeal and commercial feasibility.

Debentures have also become an important funding source for private telcos.

Since 2019, the government has approved around 20bn reais in funding for telecom project investments, mostly in the form of debentures, or special tax-exempted infrastructure bonds, which have become popular among private investors and telcos after a rule change in 2020 authorized carriers to use them.

Of the total funding outlined by the ministry, 18.5bn reais came from debenture issues and 1.2bn reais from Funttel.

Funttel is managed by development bank BNDES and project financing entity Finep and provides resources for research, development and innovation.

CORREIOS

Filho, who as a lawmaker voted in favor of privatizing Correios and whose party União Brasil was part of Bolsonaro’s governing coalition, backed the new government's decision to withdraw the postal service from the privatization program.

Filho said the goal is to reinforce the company's role as one of the few logistics companies to reach the entire national territory. Without detailing, he also promised investments in technology and logistics to modernize the company.

Correios recorded a record profit of 3.7bn reais in 2021, up 101% over 2020. Figures for full-2022 have not yet been released.

In Q3, however, the company posted a 122mn-real net loss, reversing net profits of 1.09bn reais in the year-ago period, mostly due to an increase in operational and financial expenses. 

Net revenues were 4.97bn reais, down from 5.62bn reais.