Telemar lost US$313mn on rates clamp

Brazilian telco Telemar (NYSE: TNL) lost about 900mn reais (US$313mn) by not raising rates in line with the IGP-DI inflation index in 2003, local news agency Telecom Web quoted Telemar planning director João de Deus as saying. The report did not address the theory that call volume would have dropped had the higher rates been introduced, as some market experts have indicated. Last June, the telecoms regulator Anatel authorized fixed line operators to raise rates based on the IGP-DI inflation index, which had risen 28.8% between June 2002 and June 2003. Soon afterward, consumer defense groups mobilized and managed to overturn Anatel's decision in a series of court decisions, that replaced IGP-DI with the IPCA index, which had risen just 14% over the period.