Telefónica to Cut 90k Public Pay Phones in Sao Paulo

The Brazilian unit of Spanish telephony giant Telefónica plans to cut up to 90,000 public pay phones from service in Brazil's largest city of Sao Paulo primarily due to increased penetration of mobile telephony, reported local financial newspaper Valor Econômico.

The number accounts for 25% of the company's 331,200 distinctive ear-shaped public pay phones currently in service in the city.

Telefónica, which holds the concession contract to supply fixed line telecoms services in São Paulo, is still evaluating the total number of public pay phones to be removed, the company was reported as saying by Valor.

Telefónica is studying the situation due to government decree 4,769, which made changes to fixed line concession contracts at the start of 2006.

The new law allows fixed line companies to cut the number of public phones from eight to six for every 1,000 inhabitants. Telefónica has so far removed phones from commercial premises such as bars and cafes.

Telefónica said that the use of public pay phones has decreased significantly since privatization in 1998. The demand has dropped due to the increased access to fixed line phones or cell phones, according to the company.

However, the public pay phones are still a steady source of income for Telefónica. The operator makes a profit of 30mn reais (US$13.9mn), before tax, on its public pay phones each financial quarter, an unnamed source was reported as saying by Valor. Telefónica has 12.3 million fixed line phones in service in the state.

According to former communications minister, Juarez Quadros, the level of public phones should not be reduced. He notes that the population is still increasing and high tariffs for cell phones mean that low income residents still need to use public pay phones.

However, the fixed line concession holders, which have already invested in creating a fixed line telecoms infrastructure, face new demands under the renewed concession contracts.

The new decree states that before 2011 the concession holders must install telecommunications service points with public telephones and internet access in their regions.

BNAmericas.com"

Posted to the site on 12th September 2006